Best Bad Credit Business Loans for 2020

Running a business isn’t easy, and it’s possible that your credit score isn’t perfect. If your credit score is less than 630, you have poor credit by FICO standards. However, that shouldn’t stop you from getting a loan to boost cash flow and

Bluevine
Bluevine
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OnDeck
OnDeck
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Kabbage
Kabbage
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When you have a low credit score, it can feel like a business loan is impossible, but thankfully, there is help out there. We used our exclusive SimpleScore methodology to rate and review the best bad credit business lenders of 2020, taking into account interest rates, terms and loan amounts.

The 5 best bad credit business loans of 2020

Bad credit business loans at a glance

Lender Loan Amount APR Terms Eligibility Criteria
OnDeck $5,000–$500,000 10.99%–99% 3–36 months 1 year in operation; 600 credit score; $150,000 annual revenue
Funding Circle $25,000–$500,000 8.75%–36% 1–5 years 2 years in operation; 600 credit score; $100,000 annual revenue
Fundation $20,000–$500,000 8.99%–29.99% 1–4 years 1 year in operation; 620 credit score; $100,000 annual revenue
BlueVine $5,000–$250,000 15%–88% 6 or 12 months 3 months in operation; 600 credit score; $100,000 annual revenue
Street Shares $2,000–$100,000 9%–40% 3 months–3 years 1 year in operation; 600 credit score; $25,000 annual revenue

Best for new businesses

OnDeck

No assets are required for OnDeck’s business loans with same-day turnaround.

APR
10.99%–99%
Loan Amount
$5K–$500K
Terms
3–36 months
SimpleScore
3.4 / 5.0
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SimpleScore
OnDeck
3.4
  • APR
    5
  • Loan Size
    2
  • Product Variety
    2
  • Resources
    5
  • Fees
    3
You can receive funding in as little as one business day with several options for financing, despite your credit. OnDeck can give you up to $250,000 is small-business loans or $100,000 for a line of credit. Just make sure you aren’t within the industries OnDeck doesn’t serve, or you’ll find yourself out of luck.
Full review

Our Two Cents — OnDeck is a reliable partner in crime with flexible eligibility requirements, but be prepared to pay for that flexibility.

Best for SBA loans

Funding Circle

This is an SBA loan that’s best for businesses with at least two years of operations under their belt.

APR
8.75%–36%
Loan Amount
$25K–$500K
Terms
1–5 years
SimpleScore
3.6 / 5.0
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SimpleScore
Funding Circle
3.6
  • APR
    5
  • Loan Size
    4
  • Product Variety
    1
  • Resources
    5
  • Fees
    3
Funding Circle is a peer-to-peer lender that offers a different take on the average business loan. Choose from Paycheck Protection Program loans, or opt for an SBA 7 loan that can give you up to $5 million in funds backed by the Small Business Administration. It’s no chump change when you need funds for your growing business.
Full review

Our Two Cents — Funding Circle isn’t for the new kid on the block, but if you’ve got two years of business and $150,000 annual revenue, you could benefit from these low rates.

Best for established businesses

Fundation

Benefit from the quick funding of a direct lender with reasonable rates.

APR for unsecured term loan
8.99%–29.99%
Loan Amount
$20K–$500K
Terms
1–4 years
SimpleScore
3.2 / 5.0
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SimpleScore
Fundation
3.2
  • APR
    3
  • Loan Size
    4
  • Product Variety
    2
  • Resources
    4
  • Fees
    3
Fundation is great when you need funds fast, receiving up to $500,000 with four years to repay and reasonable rates. The origination fee and late fee are all you have to worry about, so you can put more of your money toward repaying the loan.
Full review

Our Two Cents — If you have two years of revenue, Fundation can offer a quick cash grab of up to half a million dollars.

Best for businesses with outstanding invoices

BlueVine

Bluevine is a great option for new businesses to get a small loan but beware of high rates.

APR
15%–88%
Loan Amount
$5K–$250K
Terms
6 or 12 months
SimpleScore
3.6 / 5.0
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SimpleScore
BlueVine
3.6
  • APR
    3
  • Loan Size
    3
  • Product Variety
    2
  • Resources
    5
  • Fees
    5
BlueVine not only gives you quick access to funds, but it also offers a fully online application process for added convenience. You only have to be in operation for three to six months, an eligibility requirement not commonly seen among most lenders.
Full review

Our Two Cents — Skip the fees and benefit from quick cash, but be ready to pay it back ASAP.

Best for veterans

StreetShares

If you have stellar sales in your first six months of business, your new business could be eligible for up to $100,000 from StreetShares.

APR for unsecured term loan
9%–40%
Loan Amount
$2K–$100K
Terms
3 months–3 years
SimpleScore
4.2 / 5.0
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SimpleScore
StreetShares
4.2
  • APR
    5
  • Loan Size
    3
  • Product Variety
    5
  • Resources
    5
  • Fees
    3
This peer-to-peer lender won’t give you the higher loan amounts of other lenders, but its flexible eligibility requirements and attractive APRs make it a great choice for veteran business owners needing funding in one to five days. Requirements are flexible, with $25,000 for businesses of one year or $100,000 if you have just six months of operation.
Full review

Our Two Cents — New businesses rejoice — you only need $25,000 in annual sales to get up to $100,000 with StreetShares.

What is a bad credit business loan?

When you have a low credit score, it can be tough to qualify for a business loan when you need one. When lenders see a low credit score, they assume that you have difficulty repaying what you borrow. Bad credit business loan providers extend funding to businesses that have bad credit or to business owners with bad credit, despite the credit history of the borrower. You may see higher interest rates on long-term and short-term bad credit business loans, but it’s the price you pay.

However, if you pay back the loan on time with no missed payments, your credit score will improve and you may be eligible for better loans in the future.

How do bad credit business loans work?

When you need extra capital for your business, a bad credit business loan could be the right solution for you. However, a business can easily do some damage to your credit score, and you may find yourself with worse credit than you would like when you need to take out that loan.

When you apply for a loan, a lender will use your credit score and credit history to determine how likely you are to repay what you borrow. You are considered a “high risk” candidate when you have a low credit score and inconsistent payment history.

Every lender is different with its borrowing requirements. The use of a co-signer or collateral can help increase your chances of approval and earn you more favorable terms on your bad credit business loan. Business owners with bad credit are more common than you might think, and it is big business to give these business owners a loan.

[Read more: Small Businesses Can Apply For PPP Loans Again Thanks to a Second Round of Funding]

SBA loans

The Small Business Administration (SBA) is a government agency that oversees the loans given to small business owners. While the SBA does not lend directly to companies, it does set regulatory guidelines and works with lenders to provide small business owners with options when they need extra funds. By guaranteeing loans, lenders feel more secure in issuing loans to business owners who may or may not be able to pay them back. SBA loans usually carry more favorable terms than the traditional loan with better rates and lower fees, and there can be lower down payments and sometimes even no collateral. There is also additional support available in the form of counseling and educational resources.

Credit scores

There is a big difference between your personal credit score and your business credit score. It is possible to be a business owner with excellent credit and have a business with bad credit. These are considered two separate entities because while a personal credit score is a reflection of your creditworthiness, your company’s credit score is based on your business’ ability to repay its debts. If your company fails to make its other payments on time, lenders have little faith that it will repay them, too.

How to choose the best bad credit business loan for your business

  1. Check your credit report. It’s always a good idea to check your credit score, so you know where you stand before you apply for a loan. This way, you don’t risk further damage to your score and don’t waste your time on loans that definitely will not work for you.
  2. Shop different lenders. There are many different lenders out there that you can choose from, but not all of them may be the right fit for you. Some bad credit business loan providers may be better suited toward certain borrowers than others. There are also specific lenders that are better suited for particular types of borrowers — for example, StreetShares has special incentives for members of the military.
  3. Use collateral. Collateral can be a great way to become approved and gain better rates on your loan. You should not use personal assets like your home, which can be lost if you default on your loan for any reason. Instead, you should consider using assets from your business, such as equipment or savings accounts.
  4. Consider a cosigner. If you do not have collateral, you may also want to consider using a cosigner who can guarantee the loan. Find someone that you trust who has a good credit score and is willing to support the loan. This can significantly improve your chances of approval and earn you a far better rate.

Bad credit business loans FAQs

What if my business is just starting?

You might be able to get a business loan even if your business is still new. Many lenders, such as a few of the ones included here, will still offer you a loan if you are able to meet the eligibility requirements. Most banks require a certain minimum amount of sales each month and require that you have been in business for about a year, although we certainly see more and less. A cosigner or collateral are also great ways to show the lender that you have alternate ways to guarantee your loan.

How can I improve my credit before applying?

If you know that you will need a loan soon, you should pay any outstanding credit card balances as much as possible. If the lender sees that you have too much debt, you could be rejected for the loan. You can ask family or trusted friends if you can be added to their accounts as an authorized user, so you can piggy-back off their good financial habits.

What other loan options are there?

There are a few options that may work for you if you are having trouble getting approved for a loan because of bad credit. A business credit card is one of the most traditional methods of financing, but it may not work for you if you are looking for a larger loan. There are also short-term loans, but these usually need to be repaid quickly. Finally, there are short-term lines of credit, which work on a revolving basis to steadily provide you with funds over an extended period of time.

Too long, didn’t read?

The right kind of loan for you will depend on your exact needs, but you can receive a loan with bad credit. Things happen unexpectedly in life that can throw our finances for a loop, but a bad credit business loan can get help. It can provide you with the immediate cash you need to get your business back onto track, but first, you need to find the right kind of loan for your business with a low interest rate to match.

Keep reading

Methodology

The SimpleScore is our proprietary scoring metric to compare products and services at The Simple Dollar in a transparent, evidence-based way. Our editorial team identifies five quantifiable aspects to compare for every brand, determines the rating criteria for each aspect score, then averages the five aspect scores to produce a single SimpleScore. For bad credit business loans, we compared interest rates, product variety, loan amounts, resources and fees for every major lender. Our ratings are meant to be a directional tool to help you in the process of choosing a business loan provider. Be sure to continue your research and shop around for the best business loan that fits your specific needs.

We welcome your feedback on this article and would love to hear about your experience with the business loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

Lena Borrelli
Lena Borrelli
Contributing Writer

Lena Borrelli is a Tampa-based freelance writer who has worked with leading industry titans, such as Morgan Stanley, Wells Fargo, and Simon Corporation. Her work has most recently been published on sites like TIME, ADT, Fiscal Tiger, Bankrate and Home Advisor, as well as many other websites and blogs around the world.

Reviewed by

  • Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.