Small Business Loans
Small Business Loans for Bad Credit
Small business loans for bad credit provide critical funding for entrepreneurs with low credit scores. This guide explores top loan options and strategies for U.S. businesses.
- Dileep K Nair
- July 10, 2025
Table of Contents
Securing funding is one of the most important, and often difficult, steps for many small business owners. But when your credit score is low, the process becomes even more challenging.
A FICO score below 670 often limits access to traditional bank loans.
Bad credit business loans cater to those with personal scores as low as 500. Lenders rely heavily on credit scores to evaluate risk.
A poor score signals a higher chance of default, which leads many lenders to deny applications or offer less favorable terms.
However, having bad credit does not mean you have no options.
Key Takeaways
- A credit score below 630 is considered poor, but you can still get business loans with strong revenue or collateral.
- Short-term loans, lines of credit, MCAs, and microloans are more accessible to borrowers with bad credit.
- Online lenders and community-based lenders are more flexible than traditional banks.
- Improving documentation and starting with smaller loan amounts can increase your approval chances.
- Explore alternatives like grants, crowdfunding, or friends-and-family funding if loans aren’t feasible.
Small business loans for bad credit are designed to help business owners who may not meet traditional credit requirements but still have a solid business model or stable income.
These loans may come with higher interest rates or shorter terms, but they can be a valuable tool for keeping your business running or funding growth when other avenues are closed.
What Is Considered Bad Credit for a Small Business Loan?
In most lending scenarios, a personal credit score below 630 is considered “bad” or subprime. Some lenders set their cutoff at 600, while others will consider borrowers with scores as low as 500, depending on other qualifications.
Credit scores are generally categorized as follows:
| Score Range | Credit Status |
| 750–850 | Excellent |
| 700–749 | Good |
| 650–699 | Fair |
| 600–649 | Poor |
| Below 600 | Bad credit |
While these ranges apply to personal credit, many lenders also look at business credit scores such as those from Dun & Bradstreet (D&B) or Experian Business. If your business is relatively new, your personal credit will usually carry more weight.
What Lenders Look for Beyond Credit for a Small Business Loan
Bad credit makes borrowing harder, but it doesn’t disqualify you entirely. Many lenders use a combination of factors to evaluate your ability to repay a loan. These include:
Business Revenue
If your business has steady monthly income, even with bad credit, some lenders will be willing to work with you. They may request:
- Recent bank statements
- Profit and loss reports
- Monthly revenue averages
This helps them judge your ability to repay the loan based on cash flow rather than credit history.
Time in Business
Lenders tend to favor businesses that have been operating for at least 6 to 12 months. The longer you’ve been in business, the more stable and reliable you appear, even if your credit is weak.
Startups with bad credit may struggle to get approved unless they offer collateral or a strong co-signer.
Collateral or Personal Guarantee
Providing collateral, such as business equipment, inventory, or vehicles. can make lenders more comfortable extending credit. Some lenders may also ask for a personal guarantee, which means you will be personally responsible for the loan if your business can’t repay it.
Purpose of the Loan
Clearly explaining how you will use the loan can help your case. Lenders prefer to fund productive uses like:
- Purchasing inventory
- Hiring staff
- Expanding operations
- Upgrading equipment
They are less likely to approve vague or high-risk uses, such as speculative investments or settling unrelated debts.
Example:
A retail store owner with a credit score of 580 was approved for a working capital loan after showing 12 months of consistent $15,000+ monthly revenue and providing business inventory as collateral. The loan was used to restock for the holiday season, increasing sales.
This comprehensive resource covers federal, alternative, and niche loan programs. It includes practical examples and tips to maximize approval chances.
Table: Key Bad Credit Business Loan Programs for Small Businesses 2025
| Loan Program | Funding Amount | Min. Credit Score | Eligibility | Funding Speed |
| SBA Microloan | Up to $50,000 | None | Startups, underserved businesses | 30–90 days |
| Fundbox Line of Credit | Up to $150,000 | 600 | 3 months in business, $30,000 revenue | Next day |
| Business Line of Credit | $6,000-$250,000 | 10%-56% | 6-24 months | Cash flow management, short-term needs |
| Credibly Working Capital | Up to $600,000 | 500 | 6 months in business, $15,000 monthly | Same day |
| Revenued Flex Line (MCA) | Up to $750,000 | None | 1 year in business, $20,000 monthly | 1–3 days |
| FundThrough Invoice Factoring | Up to $10,000,000 | 500 | B2B with invoices | 24 hours |
| Taycor Equipment Loan | Varies by equipment | None | No minimum business requirements | Hours |
| Kiva Crowdfunded Loan | Up to $15,000 | None | U.S. businesses with social capital | 30–60 days |
| Bluevine Line of Credit | Up to $250,000 | 625 | 6 months in business, $40,000 monthly | 24 hours |
| OnDeck Term Loan | Up to $250,000 | 600 | 1 year in business, $100,000 revenue | Same day |
| Greenbox Capital Equipment | Up to $500,000 | 500 | 6 months in business, $50,000 revenue | 1–3 days |
The above lender information are given only for illustrative purpose. Use it to identify programs matching your financial needs. Always verify terms with lenders.
The options for Small Business Loans for Bad Credit borrowers are discussed below:
1. SBA-Backed Loans for Bad Credit
SBA loans are government-backed, offering lenient eligibility for bad credit borrowers. They’re ideal for businesses needing affordable, long-term financing. Below are key SBA programs for 2025.
SBA Microloan Program
The SBA Microloan Program provides up to $50,000 through nonprofit lenders. It targets startups, women, minorities, and low-income businesses. Average loans are around $13,000, with flexible credit requirements.
- Eligibility: No minimum credit score, but good credit history improves chances. Businesses must show repayment ability.
- Application Process: Apply via SBA-approved intermediaries with a business plan.
- Example: A startup bakery could secure $15,000 for equipment despite a 580 credit score.
- Tip: Highlight community impact to align with nonprofit lender goals.
SBA Community Advantage Loan
The Community Advantage program, under SBA 7(a), offers up to $350,000. It supports businesses in underserved markets with relaxed credit criteria. Collateral may be required based on loan size.
- Eligibility: Assessed case-by-case; no strict credit score minimum. Strong revenue helps approval.
- Application Process: Apply through SBA-approved community lenders with financial records.
- Tip: Provide a detailed business plan to demonstrate viability.
2. Alternative Lender Small Business Loans for Bad Credit
Alternative lenders offer flexible loans for bad credit businesses. They prioritize revenue over credit scores, with faster funding than banks. Below are key options for 2025.
Fundbox Line of Credit
Fundbox provides lines of credit up to $150,000 for businesses with bad credit. It requires a minimum credit score of 600 and three months in business. Funding is available as soon as the next day.
- Eligibility: 600+ credit score, $30,000 annual revenue, three months in business.
- Application Process: Apply online with bank statements; no collateral needed.
- Tip: Use Stripe integration for faster application via Fundbox.
Accion Opportunity Fund Working Capital Loan
Accion Opportunity Fund offers loans from $5,000 to $250,000. It targets minority, women, and low-income entrepreneurs with bad credit. Competitive rates and long terms make it affordable.
- Eligibility: 600+ credit score, 12 months in business, $50,000 annual revenue.
- Application Process: Submit online with financials; expect slower processing.
- Tip: Highlight diversity or community impact in your application.
Credibly Working Capital Loan
Credibly provides up to $600,000 for businesses with credit scores as low as 500. It requires six months in business and $15,000 monthly revenue. Funding is available same-day.
- Eligibility: 500+ credit score, six months in business, $15,000 monthly revenue.
- Application Process: Apply online with bank statements; personal guarantee required.
- Example: A retail store could secure $100,000 for inventory despite a 550 score.
- Tip: Ensure strong cash flow to meet revenue requirements.
Bluevine Line of Credit
Bluevine offers lines of credit up to $250,000 for bad credit businesses. It requires a minimum credit score of 625 and six months in business. Funding is available within 24 hours.
- Eligibility: 625+ credit score, six months in business, $40,000 monthly revenue.
- Application Process: Apply online with bank statements; no collateral needed.
- Tip: Ensure strong monthly revenue to meet Bluevine’s criteria.
OnDeck Term Loan
OnDeck provides term loans up to $250,000 with a minimum credit score of 600. It requires one year in business and $100,000 annual revenue. Approval is fast, often same-day.
- Eligibility: 600+ credit score, one year in business, $100,000 annual revenue.
- Application Process: Submit online with financials; personal guarantee required.
- Tip: Highlight consistent revenue to offset credit concerns.
3.Merchant Cash Advances (MCA) for Bad Credit
Merchant cash advances provide quick funding based on future credit card sales. They’re ideal for businesses with bad credit but strong revenue. Below are key MCA providers.
Giggle Finance MCA
Giggle Finance offers advances for freelancers and self-employed individuals. It accepts all credit scores, focusing on bank activity. Funding is available same-day with no collateral.
- Eligibility: Three months in business, $18,000 annual revenue, no credit check.
- Application Process: Apply online with bank information; simple process.
- Tip: Ensure consistent bank deposits to boost approval odds.
Revenued Flex Line
Revenued provides up to $750,000 via its Flex Line MCA. It requires one year in business and $20,000 monthly cash flow. No credit check is needed, but factor rates apply.
- Eligibility: One year in business, $20,000 monthly cash flow, no credit check.
- Application Process: Submit online with revenue proof; fast approval.
- Tip: Compare factor rates to understand true costs.
4. Invoice Factoring for Bad Credit
Invoice factoring turns unpaid invoices into immediate cash. It’s ideal for B2B businesses with bad credit. Below are top providers for 2025.
FundThrough Invoice Factoring
FundThrough offers factoring up to $10,000,000 based on invoice value. It accepts credit scores as low as 500. Funding is available within 24 hours.
- Eligibility: B2B businesses with invoices, 500+ credit score, no time-in-business minimum.
- Application Process: Apply online with invoice details; automated process.
- Tip: Ensure invoices are from creditworthy clients.
altLINE Invoice Factoring
altLINE provides factoring with no minimum credit score requirement. It focuses on business financial health over credit. Advances cover up to 90% of invoice value.
- Eligibility: B2B businesses with invoices, no credit score minimum.
- Application Process: Submit invoices and financials online; fast approval.
- Tip: Provide clear invoice records to speed up funding.
5. Equipment Financing for Small Business Bad Credit
Equipment financing uses the purchased equipment as collateral. It’s accessible for bad credit businesses needing assets. Below are key options.
Taycor Financial Equipment Loans
Taycor Financial offers equipment loans with no minimum credit score. It requires no time-in-business or revenue minimums. Approval is fast, often within hours.
- Eligibility: No credit score, time-in-business, or revenue minimums.
- Application Process: Apply online with equipment details; flexible terms.
- Tip: Specify equipment details to streamline approval.
Greenbox Capital Equipment Financing
Greenbox Capital provides equipment loans up to $500,000. It focuses on business health over credit scores. Timely repayments can improve credit.
- Eligibility: Six months in business, $50,000 annual revenue, 500+ credit score.
- Application Process: Apply online with financials; quick funding.
- Tip: Highlight repayment ability to secure better terms.
6. Other Notable Bad Credit Financing Options for Small Businesses
Additional financing options support bad credit businesses. They address specific needs like startups or peer-to-peer funding. Below are key programs.
Kiva Crowdfunded Loans
Kiva offers 0% interest loans up to $15,000 via crowdfunding. It requires no minimum credit score. Entrepreneurs must crowdfund from their network.
- Eligibility: U.S.-based businesses, no credit score requirement, social capital needed.
- Application Process: Apply via Kiva’s platform; invite lenders to fund.
- Tip: Leverage your network to meet crowdfunding goals.
PayPal Working Capital
PayPal Working Capital provides loans based on PayPal sales history. It requires no credit check, focusing on transaction volume. Funding is fast, often within minutes.
- Eligibility: Three months of PayPal sales, no credit score minimum.
- Application Process: Apply via PayPal dashboard; repay via sales percentage.
- Tip: Ensure consistent PayPal sales for higher loan amounts.
How to Improve Your Credit Score for a Small Business Loan
Bad credit can limit loan options and increase costs. Improving your credit score enhances eligibility for better terms. Below are actionable steps to boost your score in 2025.
Pay Bills on Time
Timely payments are critical for credit improvement. Late payments can lower your score significantly. Set up automatic payments for bills and loans.
For example, paying vendor invoices on time builds a positive payment history. This can raise your Dun & Bradstreet PAYDEX score. Consistency is key to long-term gains.
Reduce Debt Levels
High debt lowers your credit utilization ratio, hurting your score. Aim to keep credit card balances below 30% of limits. Pay down high-interest debts first.
For instance, reducing a $10,000 credit card balance to $3,000 can improve your FICO score. This signals financial responsibility to lenders. Regular debt reduction is essential.
Dispute Credit Report Errors
Errors on your credit report can unfairly lower your score. Review reports from Equifax, Experian, and TransUnion annually. Dispute inaccuracies promptly with evidence.
For example, correcting a misreported late payment can boost your score. This process takes 30–60 days but is worthwhile. Accurate reports strengthen loan applications.
Limit New Credit Applications
Multiple credit inquiries can signal risk to lenders. Avoid applying for new credit cards or loans before seeking a business loan. Space out applications by six months.
For instance, limiting inquiries helped a retailer raise their score from 580 to 650. This improved their SBA Microloan eligibility. Strategic timing preserves your score.
Build Business Credit
Establishing business credit separates personal and business finances. Open a business credit card or vendor account reporting to Dun & Bradstreet. Pay on time to build a strong profile.
For example, a contractor using a business card raised their PAYDEX score to 80. This enhanced their loan approval odds. Consistent business credit use is vital.
How to Improve Your Chances of Getting a Business Loan with Bad Credit
While you may not be able to fix your credit overnight, there are practical steps you can take to strengthen your loan application and reduce a lender’s risk. These actions can help improve your approval odds, even if your credit score is below 600.
Build Business Revenue Before Applying
If your credit is poor, your business’s income becomes a key approval factor. Consistent monthly revenue, even at moderate levels, can increase lender confidence. If possible, delay your application and build a few more months of reliable sales records before applying.
Prepare Clear Financial Documents
Many rejections happen not because of bad credit, but because the application lacks basic financial records. Organize and prepare:
- 3 to 6 months of bank statements
- Profit and loss statements
- Business license or registration
- A simple explanation of how the loan will be used
This shows lenders that your business is operational and stable.
Consider a Co-Signer or Collateral
Having someone with good credit co-sign your loan, or offering an asset as security, can help you get approved. A co-signer agrees to repay the loan if you can’t, reducing the lender’s risk.
Collateral might include:
- Equipment
- Real estate
- Inventory
- Vehicles
Lenders are more flexible when they know they have something of value to fall back on.
Start with Smaller Loan Amounts
Smaller loans are easier to get approved for. Lenders are more likely to take a chance on a $10,000 loan than a $100,000 one. As you repay successfully, you may qualify for larger amounts in the future at better terms.
Work with Nontraditional or Community-Based Lenders
Banks tend to have strict lending policies. But nonprofit lenders, online platforms, and CDFIs are often more open to working with borrowers who have poor credit, especially if you show potential and a clear repayment plan.
Example:
A food truck owner with a 570 credit score needed $20,000 to upgrade their vehicle. By providing six months of strong bank statements showing $10,000 monthly revenue and a detailed business plan projecting 25% sales growth, they secured a Credibly Working Capital Loan. Disputing a credit report error also raised their score to 590, boosting approval odds.
How to Choose a Best Small Business Loan with Bad Credit
Choosing the right loan when you have bad credit requires more caution and comparison. Since many bad credit loan products come with higher interest rates and stricter terms, it’s important to focus on long-term affordability and lender transparency.
Here are the key factors to consider:
Challenges and Solutions for Women Seeking Business Loans
Beyond loans, women entrepreneurs can access a variety of resources to support their financing journey and business growth. These programs offer training, counseling, and networking opportunities to enhance financial literacy and business acumen.
Understand the Total Cost of Borrowing
Look beyond the interest rate and calculate the annual percentage rate (APR), which includes all fees, charges, and interest. This gives you a complete picture of the true cost of the loan.
Some high-risk loan products may appear manageable on a monthly basis but carry extremely high APRs that can hurt your business over time.
Choose the Loan Type That Matches Your Business Need
Every loan product is designed for a specific use case. For example:
- If you need to cover cash flow gaps, a line of credit offers flexibility.
- For a one-time equipment purchase, equipment financing is ideal.
- If you have invoices waiting to be paid, consider invoice financing.
Avoid choosing a loan based only on what you can qualify for. Match the loan structure to your intended use to avoid overborrowing or cash flow issues.
Review the Repayment Terms
Loans for bad credit often come with daily or weekly repayment schedules, especially with short-term loans and merchant cash advances. These frequent repayments can strain your cash flow if your revenue isn’t consistent.
Make sure the repayment schedule aligns with your business’s income cycle.
Check for Prepayment Penalties and Fees
Some lenders charge penalties if you repay the loan early. Others may include origination fees, maintenance charges, or draw fees for lines of credit. Read the terms carefully and factor in all additional costs before accepting the loan.
Evaluate the Lender’s Reputation
Choose a lender with transparent terms, clear communication, and verifiable customer reviews. Look for:
- Accreditation from organizations like the Better Business Bureau (BBB)
- Positive reviews on independent platforms
- Clear contact and support options
Avoid lenders that promise guaranteed approval, pressure you into quick decisions, or charge upfront fees before issuing the loan.
Final Thoughts
Securing a small business loan with bad credit is challenging but achievable. Options like SBA microloans, alternative lenders, invoice factoring etc provide accessible funding. These programs cater to businesses with credit scores as low as 500.
Start by assessing your business’s financial health and credit report. Identify lenders that align with your revenue and time-in-business profile. A strong business plan can make a significant difference.
Compare interest rates and terms to avoid costly loans. Choose options that balance speed and affordability.
Prequalify with lenders to understand your eligibility without harming your credit. Early applications increase your chances of approval.
With persistence and preparation, bad credit loans can fuel your business growth. They provide the capital needed to overcome financial barriers.
Frequently Asked Questions (FAQs)- Small Business Loans for Bad Credit
What is the minimum credit score to get a small business loan?
The minimum credit score required for a small business loan varies by lender and loan type. Traditional banks typically require a personal credit score of at least 680, while online and alternative lenders may approve borrowers with scores as low as 500.
In general, a credit score of 600 to 640 is often considered the baseline for most mid-tier financing options. However, other factors such as revenue, time in business, and collateral also influence the decision.
Can I get a small business loan with bad credit?
Yes, you can get a small business loan with bad credit, though your options may be more limited. Lenders that work with credit-challenged borrowers often offer short-term loans, merchant cash advances, equipment financing, or microloans.
While the interest rates may be higher, approval is often based on business revenue, time in business, and your ability to provide collateral or a personal guarantee.
Can I get an SBA loan with a 500 credit score?
Most SBA loan programs, including the popular 7(a) loan, typically require a credit score of at least 640 to 680. However, SBA microloans, which are issued through local nonprofit intermediaries, may have more flexible credit requirements.
If your score is around 500, it’s unlikely you will qualify for standard SBA loans, but you may be considered for a microloan if you show strong revenue, a detailed business plan, or community impact.
Can an LLC get a loan with no credit?
An LLC can still qualify for a loan even if it has no established business credit history. In such cases, lenders will evaluate the personal credit score of the owner(s), along with business income, time in operation, and available assets.
If your LLC has no credit and your personal credit is also limited, consider applying for microloans, startup-friendly financing, or working with lenders that accept new businesses.
Can I get a business loan with a 500 credit score?
Yes, some lenders offer business loans to applicants with a credit score of 500 or lower, especially if the business has strong monthly revenue. These lenders typically offer short-term loans, cash advances, or equipment financing.
However, the loan amount may be smaller, and interest rates can be significantly higher. Improving your credit or offering collateral can improve your terms and approval chances.
Are there business loans that don’t require a credit check?
Some business financing options rely more on revenue than credit. Merchant cash advances, invoice factoring, and some equipment financing programs do not rely on hard credit checks. Instead, they assess your sales volume, customer invoices, or the value of the equipment.
These options are often suitable for businesses with steady income but poor or no credit.
How much can I borrow with bad credit?
The loan amount you can qualify for with bad credit depends on your business’s revenue, time in operation, and the type of loan you’re applying for. Most bad credit loans range between $5,000 and $250,000.
Higher loan amounts usually require stronger financial documentation or collateral. For newer businesses, microloans and lines of credit may start at lower limits, typically under $50,000.
Can a new business with bad credit get funding?
Yes, although funding for new businesses with bad credit is limited. Startups without established credit or revenue may still qualify for microloans, equipment financing, or funding from community-based lenders.
You can also explore crowdfunding or grants as non-debt options. To improve your chances, prepare a strong business plan, organize financial documents, and consider securing a co-signer or offering collateral.
What should I do if I’m denied a business loan because of my credit?
If you’re denied a business loan due to poor credit, take these steps:
- Request feedback from the lender to understand the reasons for denial.
- Review your credit report for errors and take steps to improve your score.
- Explore alternative financing, such as microloans, grants, or lines of credit with flexible underwriting.
- Strengthen your business financials, improve revenue tracking, organize documents, and reduce existing debt.
- Consider applying with a co-signer or securing a smaller loan amount to build repayment history.
Persistence and preparation are key. Many entrepreneurs get approved after addressing the issues that led to their initial denial.
What’s Next?
Explore fast, flexible loan options designed for easy approval and quick access to funds.
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