BEST OF
Best Business Loans for Bad Credit 2020
Online lenders provide small-business loans for borrowers with bad credit. Rates may be higher than bank loans.
Bad credit, defined by FICO as a score of 300 to 629, is a common reason that lenders reject small-business loan applications. Borrowers with poor credit scores are considered at higher risk of defaulting on a loan. Still, even with bad credit, you have financing options, including online loans. We always recommend comparing multiple small-business loans to find the one that best fits your financing needs.
LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?
Bad credit, defined by FICO as a score of 300 to 629, is a common reason that lenders reject small-business loan applications. Borrowers with poor credit scores are considered at higher risk of defaulting on a loan. Still, even with bad credit, you have financing options, including online loans. We always recommend comparing multiple small-business loans to find the one that best fits your financing needs.
LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?
Easily get real, personalized small business loan rates to compare — not just ranges or estimates.
It’s free and won’t affect your credit.
on Fundera's website
Our picks for
500+ personal credit score
Kabbage and Fundbox provide short-term cash for working capital.
Kabbage - Line of credit
Est. APR
24.00 - 99.00%
Min. Credit Score
560
Pros
- Financing up to $250,000 available within a few days.
- Accepts low credit scores.
Cons
- Rates are high compared to other online lenders.
- Must have online checking or PayPal account to verify cash flow.
- Fixed-fee structure means early repayment does not save interest.
Qualifications
- Minimum credit score: 560.
- Minimum time in business: 1 year.
- Minimum annual revenue: $50,000.
Fundbox - Line of credit
Est. APR
10.10 - 79.80%
Min. Credit Score
550
Pros
- Cash can be available by the next day.
- Low minimum credit score requirement.
Cons
- Rates are high compared to traditional banks.
Qualifications
- Minimum credit score: 550.
- Minimum time in business: 3 months.
- Minimum annual revenue: $50,000.
Our pick for
600+ personal credit score
BlueVine - Line of credit
Est. APR
15.00 - 78.00%
Min. Credit Score
650
Pros
- Cash can be available within 12 to 24 hours.
- Multiple products for different financing needs
Cons
- Short repayment term results in higher payment amounts.
- Requires personal guarantee.
- Not available in North Dakota, South Dakota or Vermont.
Qualifications
- 6-month line of credit
- Minimum credit score: 650.
- Minimum time in business: 36 months.
- Minimum annual revenue: $100,000.
- 12-month line of credit
- Minimum credit score: 650.
- Minimum time in business: 3 years.
- Minimum annual revenue: $480,000.
Our pick for
Businesses with unpaid customer invoices
BlueVine lets you turn your unpaid customer invoices into immediate cash. It typically evaluates the strength of your customers, such as whether they pay on time, more than your personal credit.
BlueVine - Invoice factoring
Est. APR
15.00 - 68.00%
Min. Credit Score
530
Pros
- Finances larger invoices.
- Cash can be available within the same day.
- Accepts low minimum credit score and short time in business.
Cons
- Not for businesses that do not invoice on net terms.
- Loan amount is tied to the value of your invoices.
- Dependency on customers to pay their bills on time.
Qualifications
- Minimum credit score: 530.
- Minimum time in business: 3 months.
- Minimum annual revenue: $100,000.
Easily get real, personalized small business loan rates to compare — not just ranges or estimates.
It’s free and won’t affect your credit.
on Fundera's website
Summary of Best Business Loans for Bad Credit 2020
| Lender | Best For | Est. APR | Min. Credit Score |
|---|---|---|---|
Kabbage - Line of credit | Best for 500+ personal credit score | 24.00 - 99.00% | 560 |
Fundbox - Line of credit | Best for 500+ personal credit score | 10.10 - 79.80% | 550 |
BlueVine - Line of credit | Best for 600+ personal credit score | 15.00 - 78.00% | 650 |
BlueVine - Invoice factoring | Best for Businesses with unpaid customer invoices | 15.00 - 68.00% | 530 |
How do you get a business loan with bad credit?
Alternative lenders provide options for borrowers with a spotty credit history. Most of these lenders require a minimum personal credit score ranging from 500 to 650. A few lenders have no minimum credit score requirement.
Other factors that may be considered include your annual revenue, time in business and whether you’ve had recent bankruptcies.
Borrowers should consider the following before choosing a financing option:
A lower credit score may result in a higher interest rate on your loan.
If you have unpaid customer invoices, you can get immediate cash through invoice factoring or financing. While lenders may still check your credit score, approval is based mainly on the value of your invoices.
If you can wait and improve your personal credit, you may qualify for more options at better rates.
If you have less than a year in business
If your enterprise is less than a year old with little revenue, it’ll be tough to find a loan, no matter your credit. Here are startup financing options to help you grow your company.
Potential options include business credit cards, which typically provide borrowing amounts up to $50,000. However, approval is based on your personal credit score, and you’ll need a minimum credit score of 630 to qualify for most cards.
If you need to improve your credit score, consider getting a secured personal credit card first. These cards require a cash security deposit when you open the account. However, use the card responsibly, and you’ll improve your personal credit and get back your deposit.
Compare more small-business loan options
If none of the loans included here works for you, or if you’d like to compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.
Last updated on May 4, 2020
To recap our selections...
NerdWallet's Best Business Loans for Bad Credit 2020
- Kabbage - Line of credit: Best for 500+ personal credit score
- Fundbox - Line of credit: Best for 500+ personal credit score
- BlueVine - Line of credit: Best for 600+ personal credit score
- BlueVine - Invoice factoring: Best for Businesses with unpaid customer invoices
Frequently asked questions
Some online lenders accept borrowers with bad personal credit scores (300 to 629 FICO). A lower credit score may result in a pricier loan, so building your credit first may qualify you for cheaper options.
Most lenders require a minimum credit score ranging from 500 to 650 FICO, 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.
