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Best Business Loans for Startups With Bad Credit of 2024

By Randa Kriss, Olivia Chen
Last updated on May 8, 2024
Edited bySally Lauckner
✅Fact checked and reviewed
Startup business loans are available if you have bad credit, but you should shop carefully to keep costs in line.

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Online and nonbank lenders may offer business loans for startups with bad credit, but they can be expensive with higher interest rates and fees. You should make sure your new business can handle the potential costs of any debt before taking it on.
To qualify for financing, you may need at least six months in business and a minimum credit score of 500, although requirements vary by lender. Reputable lenders do not offer guaranteed approval.
Below, compare some of the best startup business loans for bad credit — a score of around 300 to 629. Plus, learn more about alternatives if you can’t qualify for a small-business loan until your company grows.

How much do you need?

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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 9 startup business loans for bad credit

LenderNerdWallet Rating▼Max loan amount▼Min. credit score▼Next steps

OnDeck - Online term loan

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5.0/5

Best for Unsecured startup business loans for bad credit

$250,000625

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Headway Capital - Line of credit

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5.0/5

Best for Low-revenue business loans for startups with bad credit

$100,000625

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Fundbox - Line of credit

5.0/5

Best for Quick business loans for startups with bad credit

$150,000600

Fora Financial - Online term loan

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4.5/5

Best for Short-term business loans for startups with bad credit

$1,500,000570

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Giggle Finance Merchant Cash Advance

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Best for Easy approval startup business loans for bad credit

$5,000300

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National Funding - Equipment Financing

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4.5/5

Best for Equipment financing for startup businesses with bad credit

$150,000600

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AltLINE - Invoice Factoring

4.5/5

Best for Invoice factoring for startup businesses with bad credit

$10,000,000300

SBA Microloan

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Best for Microloans for startup businesses with bad credit

$50,000620

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Accion Opportunity Fund - Small Business Working Capital Loan

5.0/5

Best for Startup business loans for women and minority groups with bad credit

$250,000570

Here are 9 startup business loans for bad credit

Best for Unsecured startup business loans for bad credit

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Low-revenue business loans for startups with bad credit

Headway Capital

Max Amount

$100,000

Min. Credit Score

625

Best for Quick business loans for startups with bad credit

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Short-term business loans for startups with bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

570

Best for Easy approval startup business loans for bad credit

Giggle Finance

Max Amount

$5,000

Min. Credit Score

300

Best for Equipment financing for startup businesses with bad credit

National Funding

Max Amount

$150,000

Min. Credit Score

600

Best for Invoice factoring for startup businesses with bad credit

AltLINE

Max Amount

$10,000,000

Min. Credit Score

300

Best for Microloans for startup businesses with bad credit

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

Best for Startup business loans for women and minority groups with bad credit

Accion

Max Amount

$250,000

Min. Credit Score

570

I'M INTERESTED IN:

Our pick for

Unsecured startup business loans for bad credit

OnDeck does not require physical collateral or a down payment. You may be able to qualify with one year in business and a credit score of 625 or higher.

OnDeck - Online term loan

5.0
NerdWallet rating 

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
5.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

625

Apr range

27.20-99.90%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

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Our pick for

Low-revenue business loans for startups with bad credit

Your startup may be able to qualify for a line of credit from Headway Capital with a minimum credit score of 625 and a monthly revenue of approximately $4,167 or more.

Headway Capital - Line of credit

5.0
NerdWallet rating 

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Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.
5.0
NerdWallet rating 

Max loan

$100,000

Min. Credit score

625

Apr range

35.00-80.00%

Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.

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Our pick for

Quick business loans for startups with bad credit

Fundbox can approve and fund line of credit applications within 24 hours. You may be able to qualify with six months in business and a minimum credit score of 600.

Fundbox - Line of credit

5.0
NerdWallet rating 
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
May fund quickly
5.0
NerdWallet rating 

Max loan

$150,000

Min. Credit score

600

Apr range

36.00-99.00%

Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.

Our pick for

Short-term business loans for startups with bad credit

Fora Financial offers short-term business loans to borrowers with at least six months in business and a credit score of 570 or higher.

Fora Financial - Online term loan

4.5
NerdWallet rating 

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Max Loan Amount
$1,500,000
Min. credit score
570
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.
4.5
NerdWallet rating 

Max loan

$1,500,000

Min. Credit score

570

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.

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Our pick for

Easy approval startup business loans for bad credit

Giggle Finance only requires at least three months in business and an average monthly revenue of $3,000 or more. Like all merchant cash advances, however, this product may be expensive.

Giggle Finance Merchant Cash Advance

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Max Loan Amount
$5,000
Min. credit score
300
Giggle Finance provides capital to freelancers, contractors and self-employed individuals.

Max loan

$5,000

Min. Credit score

300

Giggle Finance provides capital to freelancers, contractors and self-employed individuals.

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Our pick for

Equipment financing for startup businesses with bad credit

National Funding can work with startups that have at least six months in operation and borrowers with a credit score of 600 or higher.

National Funding - Equipment Financing

4.5
NerdWallet rating 

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Max Loan Amount
$150,000
Min. credit score
600
Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.
4.5
NerdWallet rating 

Max loan

$150,000

Min. Credit score

600

Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.

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Our pick for

Invoice factoring for startup businesses with bad credit

AltLINE has no minimum credit score or length of time in business requirements. It can advance up to 90% of your unpaid invoices, with rates as low as 0.80%.

AltLINE - Invoice Factoring

4.5
NerdWallet rating 
Max Loan Amount
$10,000,000
Min. credit score
300
AltLINE offers fast invoice factoring with competitive factoring rates.
4.5
NerdWallet rating 

Max loan

$10,000,000

Min. Credit score

300

AltLINE offers fast invoice factoring with competitive factoring rates.

Our pick for

Microloans for startup businesses with bad credit

Microlenders and nonprofit organizations can offer loans of up to $50,000 and may be willing to work with new businesses with bad credit.

SBA Microloan

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Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.

Max loan

$50,000

Min. Credit score

620

Apr range

8.00-13.00%

SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.

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Our pick for

Startup business loans for women and minority groups with bad credit

You may be able to qualify for a loan from Accion with 12 months in business and a minimum credit score of 570 or higher. Accion focuses its funding efforts in underserved communities — and says 90% of its borrowers are women, people of color, and/or low-to-moderate income.

Accion Opportunity Fund - Small Business Working Capital Loan

5.0
NerdWallet rating 
Max Loan Amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
5.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

570

Apr range

8.49-24.99%

Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.

How Much Do You Need?

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What is a bad credit score?

According to the most common scoring models, such as FICO and VantageScore, poor or bad credit scores can fall between 300 and 629, while scores between 630 and 689 may be considered fair. Length of credit history, mix of account types (loans, credit cards, etc.), delinquencies or poor payment history are among the factors that can influence your credit score.
Credit score requirements will vary based on your lender and the type of loan you’re looking for, but bad-credit business loans are generally available to borrowers with FICO scores below 630.

Where to get a startup business loan with bad credit

Banks and other traditional lenders often won’t lend to startups, especially those with a low credit score or thin credit history, because these businesses don’t have an established financial history to prove they can repay their debts. Online lenders are typically more flexible and generally require six months to one year in business whereas banks often ask for two years or more.
It is possible to get a startup business loan with bad credit, but options will be limited — and potentially costly. Here are some choices to consider.

Online lenders

Online lenders may offer startup business loans to companies less than a year old or those whose owners have lower credit scores. Generally, these loans will have high annual percentage rates (APRs) because startup borrowers with bad credit are seen as riskier for the lender.
To qualify, your startup will typically need to be generating income already. For example, the Fundbox line of credit requires at least $8,333 in monthly revenue. You don’t usually have to provide collateral for these loans, though lenders may ask for a personal guarantee and/or take out a general lien on your business assets.
Online lenders may offer different types of business loans, such as short-term loans, business lines of credit, equipment financing and invoice factoring.
» MORE: Compare the best startup business lines of credit

Community development financial institutions

Community development financial institutions, or CDFIs, receive funding to help underserved communities. Startups that lack resources, opportunity or financial access may be able to get a business loan from a CDFI, even with bad credit.
Because CDFIs are typically banks and credit unions, they may offer competitive rates if you can qualify. However, approvals can take time, so your business will need to be able to wait for funding.
You can find a full list of community development institutions in your state on the CDFI Fund website.

Microlenders

Similar to CDFIs, microlenders often focus on providing capital to traditionally underserved individuals who may be underbanked and have insufficient credit. If you qualify, a microloan can be a good choice for bad-credit startups with small funding gaps. Loans are usually $50,000 or less.
Some microlenders also issue loans through the SBA microloan program, which is specifically designed to help women, low-income, veteran and minority entrepreneurs, as well as startups and microbusinesses. Although rates and terms can vary based on the microlender, the program typically offers competitive interest rates and terms up to seven years.

Merchant cash advance companies

Merchant cash advance companies are alternative lenders that offer an upfront sum of capital that you repay with a percentage of your debit and credit card sales, otherwise known as a merchant cash advance. You may also be able to get an MCA directly from your payment processor, like PayPal or Shopify.
MCAs are generally easier to qualify for than typical business loans. Many merchant cash advance companies have low credit score requirements and prioritize your sales history when underwriting your application. As a result, MCAs may be a convenient option for startup businesses with consistent revenue, but lower credit scores.
It’s important to keep in mind, however, that these products can significantly impact your cash flow and have high costs (APRs can reach up to 350%), so you’ll likely want to consider all other options before turning to an MCA.

How to get startup business loans with bad credit

1. Evaluate your business’s credentials

In order to determine what type of business loan you can qualify for, you should check your personal credit score as well as pull your company’s financial documents, such as bank statements and balance sheets.
Although eligibility requirements vary by lender, you’ll typically want to have:
  • Personal credit score of 500 or higher.
  • At least six months in business.
  • Consistent revenue.

2. Calculate how much debt you can afford

A lower credit score and shorter time in business can result in higher interest rates — making it difficult to repay a new loan. You’ll want to figure out how much debt you can afford before comparing loan options.
You should break down different possibilities — taking into account how much funding you need, potential interest rates and the repayment schedule. Many startup business loans for bad credit have a daily or weekly repayment schedule which can negatively impact your cash flow.
Before moving forward, you’ll want to make sure that taking on a loan will actually benefit your business at this time.
» Use our business loan calculator to help you estimate payments and interest costs.

3. Compare lenders

Generally, online lenders will offer the most options for startup business loans for bad credit. You may also find CDFIs or microlenders that are willing to work with your business. You’ll want to make sure that you understand the lender’s product offering and eligibility requirements before applying.

🤓 Nerdy Tip

Predatory lenders often target borrowers who are having trouble qualifying for financing. Be wary of any lender that guarantees approval, advertises business loans with no credit check, requires a fee to review your application and lenders that are not transparent about rates and terms. At best, those may be expensive products. At worst, they could signal predatory lenders that will potentially hurt your new company more than help it.

4. Prepare and strengthen your application

Lenders often consider startups and borrowers with bad credit as risky investments. Once you’re ready to start the application process, therefore, you’ll want to strengthen your business profile to help increase your chances of approval. You can:
  • Build your credit. Improving your credit — both business and personal — can expand our loan options and help you access better rates and terms. To build your personal credit, you can fix mistakes on your credit report and pay down debt. To build your business credit, you can establish trade lines with your suppliers and upload financial statements to the commercial credit bureaus. Some lenders may also offer business loans or lines of credit — backed with cash deposits — that can be used to establish positive payment histories.
  • Offer collateral. If you secure your loan with collateral, an asset that can be seized if you don’t repay the borrowed funds, you may be more likely to get financing. Offering collateral, especially when it’s not required, may also help you access more competitive interest rates and repayment terms.
  • Add a cosigner. Having a cosigner on your business loan — someone who agrees to take over payments on the loan if you default — can make your application more favorable to a lender. Valuable cosigners usually have strong credit and personal finances.

5. Submit your application

Depending on your lender, you’ll submit your business loan application online, over the phone or in person. Lenders will typically consider your personal credit score, financial history and time in business as part of the underwriting process and ask you to provide:
  • A business plan.
  • Business and personal bank statements.
  • Business and personal tax returns.
  • Business financial statements, such as a profit and loss statement or a balance sheet.
  • Cash flow projections.
You may also be required to sign a personal guarantee.
Because a good business plan can help you get funding, you may want to take advantage of the free services offered by the SBA and resources like your local Small Business Development Center and SCORE. These organizations can help you prepare your business plan and other documents that are required by the lender.

6. Review agreement and get funds

Some online lenders can issue financing within 24 hours, whereas other lenders may take longer to approve and fund loans. Before making a decision, you’ll want to compare any and all loan offers to make sure you’re getting the best deal for your business.
Once you receive your business loan agreement, you should review the document thoroughly. You’ll want to ensure that you understand the terms and conditions — and address any questions or concerns you have with your lender — before signing.

Alternatives for startups with bad credit

Startups with bad credit may have more difficulty getting traditional business loans. If you’re looking for an alternative small-business financing option, here are some to consider.
  • Personal business loans. If your startup isn’t eligible for other forms of business financing, you could consider a personal loan. These loans are credit-dependent, but options are available for borrowers with bad credit. And lenders only consider your personal financial profile, not your business history, when evaluating your application.
  • Business credit cards. If your credit is at the high end of what’s considered a bad score (below 630), you may be able to qualify for a business credit card. You can apply for a business credit card as a true startup — before you’ve generated any revenue at all — though card issuers may give more weight to your personal finances in those cases.
  • Family and friends loans. Borrowing money from family and friends may be a low-cost funding option if you can’t get a business or personal loan. The terms of the loan can be flexible because you’ll have the ability to work them out with your family member or friend. However, a written agreement with loan details can help you avoid misunderstanding down the road. Your lenders will also want to consider any IRS guidelines that may apply.
  • Startup business grants. Grants provide financing that you don’t have to repay, although applications may be competitive and time-consuming. Nevertheless, business grants can be a good option if you’re a startup with consistent early revenue, but are facing credit challenges. To qualify, you’ll want to show the grant issuer that your business idea has staying power.
  • Equity financing. Another financing option is selling equity — or shares of your business — to investors, friends or family. This is typically a good option for tech businesses and fast-growing startups, but other businesses might use an equity crowdfunding platform to reach their funding goal. Investors will probably want to review your business plan and may be more likely to invest if you can show strong early results.
  • Crowdfunding. If you’re still preparing to launch your business idea, you might try raising funds with crowdfunding — where donors receive a product or service related to your business in exchange for their contribution.

Frequently asked questions

Last updated on May 8, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms. - Flexible payment options. - Fast funding times. - Accessible customer service. - Reporting of payments to business credit bureaus. - Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

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