Bad Credit? Where to Find Business Loans

Small Business, Small Business Loans
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Bad credit is a red flag for lenders. It indicates you’ve either mismanaged your personal finances or fallen on hard times. Either way, lenders see you as higher risk — more likely to miss payments or default on a loan than a borrower with good credit.

Bad credit (defined by FICO as a score of 300 to 629) is one reason loan applications are rejected; the approval rate of business loans from big banks was just 23.3% as of June 2016, according to Biz2Credit. But alternative lenders provide options. They emphasize the strength and operating history of your business rather than your credit. Be sure to carefully compare all of your choices, weighing terms and annual percentage rate.

Here are some options:

Note: If you’re a startup less than a year old, it’ll be tough to find a loan, no matter your credit. Here are financing ideas to help you launch your company.

If your personal credit score is under 500

With a score below 500, your best bet is likely a lender with no minimum credit score. Many lenders require a minimum score to qualify, but Fundbox and Kabbage don’t. Both are good, although pricey, choices for bad-credit borrowers who need short-term working capital up to $100,000. Fundbox, however, is only for businesses with unpaid customer invoices. There’s no minimum revenue with Fundbox and no credit check. For Kabbage’s line of credit, you need least $50,000 in annual revenue and one year in business.

fundbox
kabbage
Good option for:
• Fast cash
• Businesses with unpaid invoices
• Fast cash
• Short-term working capital
Do you qualify?
• No minimum credit score
• Must have unpaid customer invoices
• Must have minimum of six months activity in an online accounting or bookkeeping software application such as Quickbooks, Xero or Wave
• No minimum credit score
• 1+ year in business
• $50,000+ annual revenue
• Must have a business checking, payment platform or accounting software account

Borrow:
$500 to $100,000 $2,000 to $100,000
APR:
13% to 68% 32% to 108%
Apply now at Fundbox
Apply now at Kabbage


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If your personal credit score is 500 or higher

With a personal credit score of at least 500 or 530, you could qualify for OnDeck or BlueVine. OnDeck is for businesses that have at least $100,000 in annual revenue and is better if you need cash for an expansion (such as purchasing equipment or making renovations). The lender reports payment activity to the three credit bureaus, so paying off your loan on time will help build your credit score. If your score is at least 530 and your business has unpaid customer invoices, consider BlueVine invoice factoring.

ondeck
bluevine
Good option for:
• Fast cash
• Inventory
• Expansion
• Fast cash
• Working capital
• Businesses with unpaid invoices
Do you qualify?
500+ credit score
• $100,000+ annual revenue
• 1+ years in business
• No personal bankruptcies in past 2 years
530+ credit score
• Must have unpaid customer invoices
• $120,000+ annual revenue
• 3+ months in business
Borrow:
$5,000 to $500,000 $20,000 to $500,000
APR:
9% to 98%17% to 60%
Apply now at OnDeck
Apply now at BlueVine


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If your personal credit score is 600 or higher

Because your score is at least 600, you can turn to Dealstruck or StreetShares for financing. For larger amounts of funding, consider Dealstruck, as it has term loans and lines of credit up to $500,000. However, you’ll also need strong minimum annual revenue of $150,000 to qualify. If you have $25,000 or more in revenue, StreetShares is an option. Its loans max out at $100,000 with 9% to 40% APR.

Dealstruck
Street Shares
Good option for:
• Expansion, inventory purchases
• Businesses with unpaid invoices
• Young businesses
• Veterans
Do you qualify?
600+ credit score
• $150,000+ annual revenue
• 1+ year in business
600+ credit score
• $25,000+ annual revenue
• 1+ year in business, unless you already have $100,000 revenue (drops to six months)
Borrow:
• $50,000 to $500,000 for term loans
• Up to $500,000 for lines of credit
$2,000 to $100,000
APR:
• 14% to 38% for term loans
• 19% to 31% for lines of credit
9% to 40%
Apply now at Dealstruck
Apply now at StreetShares


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Bad credit business loans: Summary of options

Funding optionsGood option for: Do you qualify?Loan amount & APR
fundbox

Apply now at Fundbox
• Fast cash
• Businesses with unpaid customer invoices
No minimum personal credit score
• No minimum annual revenue
• Minimum 6 months' activity in online accounting or bookkeeping software that can link to Fundbox
• $500 to $100,000
• 13% to 68%
kabbage

Apply now at Kabbage
• Fast cash
• Short-term working capital
No minimum personal credit score
• 1+ year in business
• $50,000+ annual revenue
• Must have business checking account, bookkeeping software or payment platform
• $2,000 to $100,000
• 32% to 108%
ondeck

Apply now at OnDeck
• Fast cash
• Expansion
500+ personal credit score
• $100,000+ annual revenue
• No personal bankruptcies in last 2 years
• $5,000 to $500,000
• 9% to 98%
bluevine

Apply now at BlueVine
• Businesses with unpaid customers invoices530+ personal credit score
• $120,000+ annual revenue
• 3+ months in business
• $20,000 to $500,000
• 17% to 60%
Dealstruck
Apply now at Dealstruck
• Expansion
• Inventory financing
• Asset-based financing

600+ personal credit score
• $150,000+ annual revenue
• 1+ year in business
• $50,000 to $500,000 for term loans
• Up to $500,000 for lines of credit
• 14% to 38% for term loans;
• 19% to 31% for lines of credit
Street Shares
Apply now at StreetShares
• Newer businesses
• Veterans
600+ personal credit score
• $25,000+ annual revenue
• 1+ year in business, unless you already have $100,000 revenue (drops to six months)
• $2,000 to $100,000
• 9% to 40%

Need more options?

If none of these works for you, or if you’d like to compare your loan options, NerdWallet has curated a list of small-business loans best for business owners. All of our recommendations are based on the lender’s market scope and track record and on business owners’ needs, as well as rates and other factors, so you can make the right financing decision.

Compare business loans

Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.

This article was updated July 22, 2016. It was originally published Nov. 13, 2015.

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