Bad Credit? Where to Find Business Loans

Small Business, Small Business Loans
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Bad credit, defined by FICO as a score of 300 to 629, is a common reason that banks reject small-business loan applications. Alternative lenders provide options for borrowers with a spotty credit history; these lenders typically focus more on the strength of your business than your personal credit score.

Consider these factors before choosing a financing option:

  • The lower your credit score, the more likely you’ll have a higher annual percentage rate, which includes your interest rate and all fees
  • If you have unpaid customer invoices, you can get immediate cash through invoice factoring or financing
  • How quickly do you need financing? If you could wait and improve your personal credit, you may qualify for more options

Here are our recommendations:

 

If you have less than a year in business

If you’re a startup 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.

If you have unpaid customer invoices

Fundbox and BlueVine let you turn your unpaid customer invoices into immediate cash. They typically evaluate the strength of your customers, such as whether they pay on time, more than your personal credit.

Consider Fundbox if you need less than $100,000 in financing. Borrowers pay a median fee of 7% on each invoice advance on a 12-week repayment option and 15.7% on a 24-week option.

BlueVine is a good option for businesses with larger invoices up to $2 million. BlueVine charges a weekly fee of 0.5% to 1% of the invoice amount. The fee drops by 0.1 to 0.2 percentage point for borrowers whose clients pay their invoices on time.

fundbox
    Pros:

  • Fast funding
  • No minimum revenue or credit score required
  • Fees waived if you repay before 12 or 24 weeks
    Cons:

  • Costly with APRs ranging from 16.4% to 76.5%
  • Maximum funding is $100,000
Apply now at Fundbox
bluevine-e1431706679103
    Pros:

  • High borrowing maximum of $2 million
  • Fast funding
    Cons:

  • Costly with APRs between 17% to 60%
  • Harder to qualify than Fundbox
Apply now at BlueVine


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If your personal credit score is 500 or higher

If you need cash fast, Kabbage is a good fit for businesses that need working capital of up to $150,000.

While Kabbage doesn’t require a minimum credit score to qualify, most of its borrowers have a score of at least 500, according to the company.

You’ll also need a minimum of $50,000 annual revenue and use a business checking or online payment platform.

Kabbage_Logo_150x40
    Pros:

  • Looser qualification requirements than other options
  • Fast funding
    Cons:

  • Costly financing with APRs between 24% and 99%
  • Little benefit to early repayment
Apply now at Kabbage


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If your personal credit score is 600 or higher

StreetShares and BlueVine offer financing up to $100,000.

Besides invoice factoring, BlueVine also offers a line of credit you can qualify for with just six months of business history and $120,000 in annual revenue. The lender is a good fit for short-term working capital.

StreetShares offers a term loan and line of credit at lower APRs than BlueVine. It also offers a longer repayment term of up to three years than BlueVine’s six months.

bluevine-e1431706679103

Line of credit

    Pros:

  • You need just six months of operating history to qualify for a line of credit
  • Funding as fast as 24 hours
    Cons:

  • Costly financing with APRs ranging from 16% to 62%
  • Shorter repayment term than StreetShares, at six months
Apply now at BlueVine
StreetShares-e1459274893272
    Pros:

  • Low annual revenue requirement at $25,000
  • No prepayment penalty
    Cons:

  • Weekly repayments
  • Maximum financing amount is limited to 20% of your annual revenue
Apply now at StreetShares

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Need more options?

If none of these works for you, or if you’d like to compare your loan options, NerdWallet has 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.

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

Updated May 17, 2017.