Best bad credit business loans in December 2025

A lender will also request a list of documents that includes things like profit and loss statements, recent tax returns and financial projections. Other common documents include: 

• Business formation documents.
• Recent bank statements.
• Business license and operating agreement.
• Employer identification number (EIN).
• Balance sheets.
• Proof of business insurance.
• Payroll records.
• Expected revenue.
• Driver’s license.
• Business lease agreement.
• List of accounts payable and accounts receivable.

SBA loans are loans partially guaranteed by the Small Business Administration. While many SBA loans require higher credit criteria, some types of SBA loans have relaxed eligibility requirements. This includes 7(a) loans through Community Advantage Lending Companies and SBA microloans. Though it can take time to get approved for these loans, the interest rates are lower than standard business loans open to borrowers with bad credit.

Business term loans provide a lump-sum payment upfront that must be repaid over a fixed period. Some term loans are short and have repayment terms ranging from one to two years. Medium- and long-term loans may range from three to 10 years. Lenders may offer you a short-term loan to help mitigate the risk of lending to a bad-credit borrower.

Microloans are term loans offered in small amounts. Though there isn’t a set standard, SBA microloans offer loans for $50,000 or less. They’re often easier to qualify for than larger loans because the small loan size poses less risk to the lender. Many businesses use them for startup costs.

Lines of credit are usually revolving lines of credit, similar to business credit cards. This type of financing gives you the flexibility to draw funds multiple times up to the credit limit, and you can withdraw funds any time during the draw period.

You can get approved for a line of credit and wait to use the funds until you need them. Some lines of credit have variable interest rates, which may make repayment less predictable than other loans.

Equipment loans work similarly to term loans by providing a lump sum and repayment terms typically over one to five years, but it uses the equipment you’re financing as collateral to secure the loan. Because it’s secured, it’s easier for bad credit businesses to qualify for it. It can also offer higher loan amounts and lower interest rates than unsecured loans. 

Invoice financing allows you to free cash that’s tied up in unpaid customer invoices by using them as collateral on a small business loan. 

Once your clients pay their invoices, you repay the lender, plus a fee. Invoice financing loans can be easier to qualify for if you have bad credit because lenders are more concerned with the credit score and repayment history of your clients.

Similar to invoice financing, invoice factoring helps you free up cash that’s restricted by unpaid customer invoices. Instead of using these invoices as collateral on a loan, you sell them to a factoring company at a discount in exchange for a lump sum of capital. The company then takes over collecting the invoices from your customers. 

Merchant cash advances provide upfront cash to help a company meet short-term needs. The business then repays it automatically by sending a percentage of its debit and credit card sales to the lender. This is often one of the most expensive forms of business financing and can lead to a cycle of debt if the business owner is unable to pay back the debt quickly, so it’s best used as a last resort.

If your funding needs are revolving or you don’t need a large amount of money, you may consider a business credit card for bad credit. In addition to giving you access to money, business credit cards can provide rewards and build your business credit along the way. Make sure you have a plan to pay off what you’ve charged. 

Crowdfunding campaigns can help you raise money by having many people offer small amounts. You usually pitch your business for funding using a crowdfunding platform like Kiva or Kickstarter. If you have a product idea, this can be a good way to pre-sell the product, get money from interested buyers and use that cash to start your business and produce the product they want to buy. 

Small business grants can be competitive, but they’re a source of funds that you won’t have to repay, and therefore don’t require a credit check. Most grants come from the federal, state or local government, though you can find some with large corporations. You have to meet each grant’s criteria to apply, such as the type of business or customers you serve.

While most lenders won’t offer you a traditional business loan with no credit check, some lenders offer loans with no credit check in the form of a merchant cash advance or invoice factoring. You may also be able to obtain preapproval with a soft credit check, which doesn’t impact your credit score. However, the lender will eventually run a hard credit check when you officially apply, which means you can’t avoid a credit check if you decide to go through with the loan.

Access to small business funding is a challenge for many business owners. Rate hikes and bank turmoil have led to lenders tightening credit standards and eligibility requirements. This can make it difficult for startups, bad-credit borrowers and business owners in underserved areas to get approved for small business loans. 

Our experts consider several factors in this category and award higher scores to lenders that offer flexible loan amounts, fast approval and funding and inclusive time in business and annual revenue requirements.

The affordability of a business loan often depends on a business owner's financial profile. A business with high revenue and a flexible budget will likely be able to afford most loan options. Businesses considered high risk, such as startups or those with bad credit, may struggle to find loans with affordable interest rates and reasonable fees. 

We consider a business loan affordable if the payments are manageable, you have the lowest possible rate based on your creditworthiness and there are minimal fees. Lenders that have lower rates, offer rate or fee discounts and have minimal fees receive higher scores. 

A good customer experience requires a lender to be transparent, efficient and responsive. Reputable lenders that value their customers are easy to communicate with, responsive to your questions and concerns and willing to go the extra mile to make sure you have a positive experience for the life of the loan.

Lenders offering online accounts and applications and a range of customer support availability score higher in this category. 

While the Truth in Lending Act (TILA) protects consumers against unfair or harmful lending practices, it doesn’t apply to business loans. This can make it harder to get straightforward and upfront information on loan costs when comparison shopping. We score lenders that make it easy to find rates and fees, as well as eligibility and credit score requirements, higher than those who do not disclose information.

Loan flexibility is finding a loan to meet your needs, even if you don’t have high annual revenue, several years in business or the best credit score. Loan flexibility can look like lenders that offer multiple lending products, variety in loan terms or unique options to give business owners the opportunity to fund their businesses in a way that works for them.

Lenders scoring high in this category offer varied products and services to cater to all types of borrowers and businesses.