If your credit isn’t great, it can be difficult to get a loan from a bank or credit union. But bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Interest rates on these products are often higher than on traditional small-business loans, so you’ll want to shop around to get the best terms possible and make sure the payments will be manageable for your business.
Below, you’ll find our picks for the best business loans for bad credit — defined by FICO as a score between 300 and 629 — plus information on how to qualify for financing.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 7 bad credit business loans
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Fora Financial - Online term loan with Fundera by NerdWallet | Best for Working capital loan for bad credit | $750,000 | 550 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | Best for Short-term business loan for bad credit | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Business line of credit for bad credit | $150,000 | 600 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | Best for Fast business loan for bad credit | $250,000 | 625 | with Fundera by NerdWallet |
OnDeck - Line of credit with Fundera by NerdWallet | Best for Unsecured business loan for bad credit | $100,000 | 625 | with Fundera by NerdWallet |
Triton Capital - Equipment financing with Fundera by NerdWallet | Best for Equipment loan for bad credit | $250,000 | 600 | with Fundera by NerdWallet |
SBA Microloan with Fundera by NerdWallet | Best for SBA loan for bad credit | $50,000 | 620 | with Fundera by NerdWallet |
Our pick for
Working capital loan for bad credit
If you have a credit score of 550 or higher, you may be able to qualify for a working capital loan of up to $750,000. You can use a loan from Fora Financial to purchase inventory, make payroll or manage cash flow gaps.
Fora Financial - Online term loan
Max Loan Amount
$750,000
Min. credit score
550
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing, or young but established small businesses looking for speedy financing.
Our pick for
Short-term business loan for bad credit
If your credit score is at least 625, you may be able to qualify for an OnDeck loan of up to $250,000. These short-term business loans are good for specific, one-time purchases.
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
29.90-97.30%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Our pick for
Business line of credit for bad credit
A business line of credit may be available from Fundbox if your credit score is at least 600. You only pay interest on the funds you draw from the credit line, giving you more flexibility than a term loan.
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Our pick for
Fast business loan for bad credit
Bluevine can approve applications and offer financing in as little as 24 hours. You’ll need a minimum credit score of 625 to qualify.
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
15.00-78.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
Our pick for
Unsecured business loan for bad credit
OnDeck doesn’t require you to put up physical collateral to secure your loan. However, the lender will file a lien on your business assets and require you to sign a personal guarantee.
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. credit score
625
Est. APR
29.90-65.90%
OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
May fund quickly
Our pick for
Equipment loan for bad credit
The equipment you purchase with this type of financing serves as collateral on the loan, meaning online lenders may be more flexible with their credit qualifications.
Triton Capital - Equipment financing
with Fundera by NerdWallet
Max Loan Amount
$250,000
Min. credit score
600
Est. APR
5.99-25.00%
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
Our pick for
SBA loan for bad credit
Microloans are offered through nonprofit, community-based organizations, which may be more willing than some other lenders to work with those who have bad to fair credit.
SBA Microloan
Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
The average microloan is roughly $13,000, according to the Small Business Administration.
How Much Do You Need?
A bad credit score typically lands in the range from 300 to 629 (on a scale of 300 to 850), according to the most common credit scoring models, such as FICO and VantageScore. Personal credit scores ranging from 630 to 689 are generally considered fair credit.
Individual small-business lenders may have varying guidelines for what defines a bad credit score; however, bad-credit business loans usually cater to borrowers with FICO scores below 630.
Although lenders tend to focus on your personal credit score, some may also use your business credit score to evaluate your loan application. Your business credit score reflects your business’s payment history with banks, vendors and other creditors.
Banks and credit unions likely won’t approve you if you have bad credit. But these alternative sources may let you get a business loan with a less-than-ideal credit history:
Online lenders
Most online lenders require a minimum personal credit score from 500 to 650. But a few have no minimum credit score requirement, focusing on factors like your business’s cash flow instead. Online lenders offer easier approvals and faster funding than other business lending options, but they typically charge higher rates — even for those with good credit.
CDFIs
A community development financial institution, or CDFI, receives government funding to provide banking access to low-income or underserved communities. CDFIs are often banks and credit unions, but don’t have the same strict credit requirements for lending that those financial institutions have. If you’re eligible for CDFI financing, you could get a competitive interest rate. Funding can be slower than with online lenders, though.
Microlenders
If you have bad credit, you may be able to get a microloan for your business. Microloans typically come from nonprofits. Because profit isn’t these organizations’ primary driver, they may be more willing to lend to business owners with a thin credit history.
Some microlenders also participate in the SBA microloan program and may work with newer businesses that have rocky credit histories. Many of these lenders focus on issuing loans to traditionally underserved businesses in their communities.
The downside of a microloan is right in its name: micro. Funds typically top out at $50,000, which may not be enough for your company’s needs.
It’s possible to get a business loan even if you have bad credit. Here are four steps you can follow to access the financing your business needs.
1. Check your credit
Before applying for a small-business loan, check your credit to know what lenders are going to see. You can get a free credit score on NerdWallet, and pull your personal credit report from the three major reporting bureaus for free at AnnualCreditReport.com. Business credit scores are available from Experian, Equifax and Dun & Bradstreet.
2. Build up your credit, if possible
If your credit score is lower than you’d like, consider ways to build it up before applying for business financing. For example, look for any errors on your credit reports and dispute them with the appropriate credit bureau. Other credit-strengthening strategies can include making payments more often and paying down or paying off debt, which can build your business credit as well.
3. Understand your eligibility requirements
Even if you have a less-than-perfect credit score, you may still qualify for a business loan. Before comparing different types of bad-credit business loans, however, it’s helpful to understand the criteria lenders will use to evaluate your business.
In addition to your credit score, small-business lenders are likely to consider the following:
- How long you’ve been in business.
- What your annual revenue is.
- How strong your cash flow is.
- What kind of collateral you can provide.
You should emphasize the areas where your business is successful in your loan application. For example, if you have significant collateral available — consider offering more than the minimum — or offer collateral even if the lender doesn’t require it. Your business’s strengths may make your application more attractive to lenders, even if your credit score is lagging.
On the other hand, the reasons behind your low credit score may also influence a lender’s decision. For instance, it will likely be harder to get approved if a recent bankruptcy or loan default is what’s dragging your score down.
4. Shop around and choose the best loan option for your business
Although a lower credit score may mean you have fewer options to choose from, you should still shop around and compare loan products.
Certain types of small-business loans may be easier for businesses with bad credit to qualify for — especially if you can back the loan in some way.
Invoice factoring or financing, for example, can turn unpaid customer invoices into immediate cash and is well-suited for business-to-business companies. While lenders may still check your credit score, approvals are based mainly on the value of your invoices.
Similarly, a merchant cash advance can let you tap into your credit and debit card sales for financing. But this kind of loan should be a last resort, as rates can reach triple digits.
Research different lenders and loan products to find the right fit for your business’s needs.
A low credit score may result in a higher interest rate, which could make it difficult to repay your new loan — and leave you worse off financially than you were when you started. By comparing loan offers to get the best deal possible, you’ll better position yourself for success.
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on August 24, 2022
Frequently Asked Questions
Some online and nonprofit lenders accept borrowers with bad personal credit scores (FICO scores from 300 to 629). Lenders will likely consider factors such as your annual revenue, time in business, cash flow and collateral in addition to your credit score.
A lower credit score may still result in a pricier loan, so building your credit first may qualify you for cheaper options.
Most lenders require a minimum FICO credit score ranging from 500 to 650, but some have no minimum requirement. Your annual revenue and time in business may also be considered on your application. Shop around and compare small-business loans to get one that fits your needs.
Online lenders, CDFIs and microlenders may offer startup business loans to borrowers with bad credit. Your options will be limited, however, and they can be expensive. To qualify, you’ll generally need at least six months in business and a minimum credit score of 550 or higher.