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Best bad credit business loans in April 2024

Apr 03, 2024
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It can be challenging for business owners to secure funds with subprime credit. But even if your options are limited, you may be in luck. 

Bad credit business loans are often available to business owners with personal credit scores that are considered bad to fair (FICO scores of 300 to 669). Some options like SBA loans offer low-cost capital. Many other types of business loans for bad credit often come with lower loan amounts, higher interest rates and shorter repayment terms compared to traditional loans available to people with the best credit. But if you need financing now, it’s important to have options. 

We’ve named the best bad credit business loans below along with some tips to help you find the right loan for you and your business.

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Bankrate 2024 Awards Winner: Best small business lender for bad credit

4.7

Loan amount
$5k- $5M
Term: 6 - 120 months
Interest rate
7.00- 19.99%
APR
Fastest funding
1 business day

BEST FOR SHORT-TERM LOANS

4.6

Loan amount
$5k- $750K
Term: 6 - 12 months
Interest rate
Starting at 30.00% APR
Fastest funding
1 business day

Best for fast prequalification

4.6

Loan amount
$25k- $400K
Term: 3 - 15 months
Interest rate
1.11 factor rate
Fastest funding
1 business day

BEST FOR FLEXIBLE REPAYMENT TERMS

4.6

Loan amount
$6k- $100K
Term: 12 - 12 months
Interest rate
Starting at 29.90% APR
Fastest funding
Not disclosed

Best for low payments

4.3

Loan amount
$10k- $500K
Term: 12 - 60 months
Interest rate
Starting at 5.99% APR
Fastest funding
1 business day
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on Bankrate

Best for line of credit

4.5

Loan amount
$1k- $150K
Term: 3 - 6 months
Interest rate
Starting at 4.66%
Fastest funding
1 business day

Best for secured credit building

4.3

Loan amount
Starting at $1k
Interest rate
Varies
Fastest funding
1 business day

Best for microloans

4.3

Loan amount
$1k–$15k
Term: 1 - 36 months
Interest rate
N/A
Fastest funding
5 business days

Best for working capital

4.2

Loan amount
$1k- $500K
Interest rate
Not disclosed
Fastest funding
1 business day

BEST FOR LOW-INTEREST BUSINESS LOANS

4.2

Loan amount
$5k- $250K
Term: 12 - 60 months
Interest rate
8.49- 24.99%
Fastest funding
Not disclosed

BEST FOR FLEXIBLE REPAYMENTS

4.2

Loan amount
$5k- $1M
Term: 6 - 36 months
Interest rate
1.03 - 1.52 Factor Rate
Fastest funding
1 business day

Compare the best bad credit business loans in April 2024

LENDER BEST FOR MIN. CREDIT SCORE LOAN AMOUNT MIN. TIME IN BUSINESS
Fundible Startups 450 $5,000 to $10 million 6 months
Backd Short-term loans 600 $5,000 to $750,000 12 months
Credibly Fast prequalification 550 $25,000 to $400,000 6 months
OnDeck Flexible repayment terms 625 $6,000 to $100,000 12 months
Triton Capital Fast funding 600 Up to $250,000 24 months
BusinessLoans.com Flexible repayments 550 $5,001 to $1 million 6 months
Fundbox Line of credit 600 $1,000 to $150,000 6 months
Bank of America Secured credit building Not disclosed From $1,000 6 months
Kiva Microloans N/A $1,000 to $15,000 N/A
PayPal Working Capital No credit requirements N/A $1,000 to $500,000 90 days
Accion Opportunity Fund Low-interest loans for bad credit Not disclosed $5,000 to $250,000 12 months

A closer look at our top bad credit business loans

Fundible: Best for startups

Overview: Fundible is an online lender that can fund loans within just a few hours. As it has fewer approval requirements and an adjusted underwriting process, it can typically approve more applicants than traditional banks. Fundible offers lines of credit up to $250,000. 

Why Fundible is the best for startups:  Fundible is a good option for startups because it only requires six months in business and has minimal annual revenue requirements through its network of partners. You only need to supply three recent bank statements to be considered. Fundible also doesn’t penalize businesses for paying off debt sooner than scheduled, allowing startups to eliminate their loan fast without incurring fees. 

Who Fundible is good for: Startups and business owners with bad credit can be good candidates for Fundible loans. Its website states you only need a personal credit score of 500 (a spokesperson said it will consider a score of 450) and an average monthly revenue of $8,000 to be considered for approval.

Backd: Best for short-term loans

Overview: Backd is an online lender offering business lines of credit, working capital loans and buy now, pay later loan (dubbed BackdPay). It streamlines the online application process, preapproving loans in mere minutes and funding within 24 hours. Backd grants up to $750,000 for its line of credit and $2 million for its working capital loan, which are large amounts for an online lender.

Why Backd is the best for short-term loans: Even though repayment terms are shorter than other lenders, Backd weaves standout repayment features into each of its short-term loan options. Its working capital loan offers terms of up to 16 months with flexible daily, weekly or semi-monthly payments. Get unlimited terms on a business line of credit, and repay in six or 12 months. And its unique buy now, pay later loan lets you make purchases without cash on hand and pay for them across 12 months. 

Who Backd is good for: Backd works well for businesses looking for fast, short-term funding. Take advantage of flexible repayments, depending on the loan you choose.

Credibly: Best for fast prequalification

Overview: Thanks to its partner lenders as well as direct lending, Credibly offers many types of business loans to help small and medium-sized businesses quickly get the cash they need. Loan options include working capital loans, merchant cash advances, equipment loans and invoice factoring. 

Why Credibly is the best for fast prequalification: Credibly is more accessible than other lenders. Some loans accept personal credit scores as low as 550. And you're able to prequalify without any impact to your credit score, with funds arriving in your account in as little as 24 hours if approved.

Who Credibly is good for: While Credibly has relaxed eligibility requirements, your chances of approval are best if you have a personal credit score of 675, annual revenue of $540,000 and three years' time in business. Top industries for Credibly include restaurants, contractors, electrical work, repair shops and offices/clinics of health practitioners.

OnDeck: Best for flexible repayment terms

Overview:  OnDeck is an online lender that has been around since 2006. The company has term loans and lines of credit with limited application requirements. To be considered, businesses need a FICO score of just 625 and one year in operation.

Why OnDeck is the best for flexible repayment terms: Many bad credit business loans have short terms, between six to 18 months, but OnDeck lets you choose terms up to 24 months. This allows businesses to stretch out their loan schedule and lower their monthly payment. 

Who OnDeck is good for: This bad credit business loan is good for businesses that have been around for at least one year and have at least $100,000 in annual revenue. It can accommodate a wide variety of loan amounts, offering funding for between $5,000 and $250,000. 

Triton Capital: Best for fast funding

Overview: Started in 2008, Triton Capital offers working capital, equipment financing and SBA loans to businesses across all 50 U.S. states. It can approve some loans within hours and funding often occurs within one to two business days.

Why Triton Capital is the best for fast funding: Triton Capital provides rapid access to much-needed funds, helping business owners overcome financial hurdles without delay. Whether it's for expanding operations, purchasing inventory or meeting unexpected expenses, flexible funding options cater to various business needs. You also get the convenience of choosing a payment term that fits your budget best. For example, its equipment financing loan offers monthly, quarterly, annual, semi-annual and seasonal payments.

Who Triton Capital is good for: Triton Capital is ideal for established businesses needing to cover expenses up to $250,000, though a spokesperson stated loan amounts go up to $500,00. But you’ll need at least two years’ experience and steady revenue of at least $350,000 to get approved.

BusinessLoans.com: Best for flexible repayments

Overview: BusinessLoans.com’s website is light on details, but a spokesperson confirmed with us it offers several types of loans, including term loans, lines of credit and merchant cash advances. Depending on the loan, you may be able to qualify with a personal credit score of 550, an annual revenue of $100,000 and only six months of time in business.

Why BusinessLoans.com is the best for flexible repayments: BusinessLoans.com offers a fast term loan of up to $100,000 that can be funded in as little as 24 hours. This is a short-term loan with up to 36 months to repay, which is 12 months longer than many other short-term loans that only have repayment terms of 24 months or less. 

Who BusinessLoans.com is best for: If you need a business loan for bad credit or can’t qualify for a loan with other lenders, BusinessLoans.com’s lender network may be able to help.

Fundbox: Best for line of credit

Overview: Fundbox is an online lender that focuses on helping businesses with working capital issues by offering lines of credit. That focus on a single type of loan lets it streamline the application process and improve the borrower experience. Its online application takes as little as three minutes, and it can be funded within the next day.

Why Fundbox is the best for line of credit: Fundbox offers accessible lines of credit up to $150,000. You won’t get penalized for repaying your loan early — and you can bypass the rest of the weekly fees by doing so. Plus, you can quickly access funding through its user-friendly online dashboard or app connected to your business bank account. Keep in mind that the maximum credit limit is low compared to other credit lines that go up to $250,000.

Who Fundbox is good for: Fair-credit borrowers who need fast financing and can pay off their loans quickly may get the best value. Fundbox also makes approvals easy for startup businesses with a personal credit score of 600 and a minimum time in business of six months. But the lender’s amortized weekly fees could add up to higher borrowing costs compared to other lines of credit

Bank of America: Best for secured credit building

Overview: Bank of America is one of the largest U.S. banks, with nearly 4,000 bank branches. Not all its loans will work for bad credit borrowers. But it does offer a cash-secured line of credit that can automatically convert to an unsecured line of credit as your business grows and builds credit.

Why Bank of America is the best for secured credit building: Bank of America's cash-secured line of credit requires a minimum deposit of $1,000, but your credit line will be equal to your cash security deposit. The cash secured line is accessible to new businesses under two years old, unlike most traditional banks’ loan products. It starts reviewing whether you’re eligible for an unsecured line of credit after 12 months. If your business has made on-time payments, has 2 years in business and an annual revenue of $100,000, Bank of America will consider a transition to an unsecured line of credit. 

Who Bank of America is good for: Small business owners with at least $50,000 in annual revenue and six months in business are eligible to apply. This can be a good fit for anyone who doesn't need immediate financing but instead wants to build business credit. Doing so can improve their chances of getting approved for more affordable loan options in the future. 

Kiva: Best for microloans

Overview: Kiva is a non-profit entity that offers microloans to entrepreneurs across the globe. It’s a unique combination of a crowdfunding and peer-to-peer lending platform. It allows you to apply for financing and then raise funds through your personal network before submitting the loan to other individual investors. 

Why Kiva is the best for microloans: Kiva offers microloans in the U.S. between $1,000 and $15,000 while charging zero interest. And since it doesn't have an annual revenue requirement, it's an inexpensive way for business owners to find a startup business loan with no money. Because it’s not technically a lender, it accepts brand new businesses and borrowers with poor or no credit. Repayment terms are relatively short, going up to 36 months. 

Who Kiva is good for: Because Kiva relies on community donations and investment, it’s ideal for businesses with strong community support. It also approves startup businesses with little-to-no credit history. Its loans rely more on “social credit,” your reputation for repaying the loan within the community, rather than your formal credit history.

PayPal Working Capital: Best for no credit requirements

Overview: PayPal offers a working capital loan that acts similar to a merchant cash advance. When getting the advance, business owners can choose the percentage automatically deducted from their future sales for repayment. The exact percentage and expected sales determine the repayment timeline. 

Why PayPal Working Capital is the best for no credit requirements: PayPal’s working capital loan takes an alternative approach to approving businesses based on creditworthiness and cash flow. You’ll be approved for a loan based on your volume of sales processed through PayPal. You’ll need at least $15,000 in sales with a PayPal Business account and $20,000 with a Premier account. But instead of an annual percentage rate (APR), PayPal charges a single fixed fee. You’ll have to apply to see the exact borrowing cost.

Who PayPal Working Capital is good for: PayPal’s loans work well for business owners with low revenue who are okay with fast repayment terms. Businesses must have a PayPal Business or Premier account for at least 90 days.

Accion Opportunity Fund: Best for low-interest loans for bad credit

Overview: Accion Opportunity Fund is a non-profit with a focus on offering microloans to disadvantaged communities. It provides educational opportunities in addition to financial funding. Term loans can extend up to 60 months. 

Why Accion Opportunity Fund is the best for low-interest business loans: This lender advertises interest rates as low as 8.49 percent, a rare benefit for borrowers with bad credit. On the high end, interest goes up to 24.99, which is far lower than other types of business loans accessible to borrowers with bad credit. You can request as little as $5,000, a manageable sum to pay off quickly and build better credit. 

Who Accion Opportunity Fund is good for: The majority of Accion Opportunity Fund’s customers are women, people of color and people in low-to-moderate income brackets. It’s good for people in marginalized communities who need a loan between $5,000 and $250,000 and may not have a long time in business or perfect credit. 

What is a bad credit business loan?

Bad credit business loans are similar to other business loans but designed for companies that have poor or limited credit. Eligibility requirements are more relaxed: Some lenders offer loans to small businesses with personal credit scores as low as 500. Minimum time in business and required annual revenue may also be lower, but the cost of a business loan for bad credit is typically higher since the lender takes on more risk lending to subprime borrowers. 

What is a bad credit score? 

It depends on the credit scoring model the lender uses. Most small business lenders look at your personal score rather than your business credit score. 

For personal credit, a FICO score of 300 to 579 is considered bad credit, but even borrowers with fair credit (FICO score of 580 to 669) may also have to rely on a bad credit business loan. 

Lenders may also consider business credit scores, especially if you’re pursuing an SBA loan. Depending on the scoring model, business credit scores may range from 0 to 100, with scores of 0 to 49 indicating a high-risk borrower. 

How does a bad credit business loan work?

Business loans for bad credit borrowers work similarly to any other loan. You submit an application, provide any additional documentation the lender asks and wait for approval. If you are satisfied with the loan terms and interest rate, you’ll receive a lump-sum payment or line of credit that must be repaid on a fixed schedule. 

Depending on the lender, underwriting may take longer, and the lender is more likely to ask for supporting documentation that shows your ability to repay the loan. If you opt for a secured loan over an unsecured loan, you’ll need an asset of value as collateral. Unsecured loans don't need collateral and are aimed at companies with strong credit.

Requirements for a bad credit business loan:

  • Revenue. The more your business makes, the easier it is to get a loan. Some lenders have minimum revenue requirements of $100,000 or less. 
  • Business plan. The business plan shows the lender how you expect to grow your business sustainably over time. It explains your expected revenue, your product and how it stands out in the competition, your marketing strategy and key measurements you’ll use to gauge your success.
  • Credit history. Though these loans are aimed at companies with bad credit, the lender will still look at your credit report. Some especially negative factors, like a recent bankruptcy, could block you from getting a loan.
  • Personal guarantee. Many business loans require you to sign a personal guarantee, which secures the loan with your personal assets. Some lenders require it in addition to collateral or a down payment.  
  • Time in business. New companies are risky propositions for lenders. Many lenders won’t offer loans until your company has been around for at least six to 24 months. 
  • Industry. If you’re in a boom-bust industry or one facing a downturn, it can be harder to get a loan.
  • Funding request. In some cases, lenders will want a funding request to explain your reason for funding and how your business will use the funds. 
  • Existing business debt. The more debt your company has, the harder it will be to get a new loan because your company could struggle to pay an additional bill.
  • Collateral: Bad credit business loans often require collateral to be used as repayment and mitigate the lender's risk in the event of default. 

When you apply, you’ll likely need to provide some documents to the lender. It can help to have these ready when you apply:

Average interest rates for bad credit business loans

The interest rates for bad credit business loans are wide-ranging and less predictable than loans for good credit borrowers. Bad credit business loans can have interest rates anywhere from 25 percent to 99 percent or higher. But that range can differ a lot between the many types of bad credit loans available. Plus, some lenders may assess costs using factor rates instead of interest rates, which can end up costing more than a business loan with a comparable interest rate.

Another reason for the unpredictable rates is that it varies based on factors like your credit score and financial profile. For example, lenders will offer more favorable rates to business owners with a fair personal credit score of 640, more than two years in business and yearly revenue of $200,000 or higher, compared to someone with a credit score of 550 who has only been in business for six months and generating less than $12,000 in monthly revenue. 

Types of bad credit business loans

There are many types of business loans for bad credit borrowers. Some of these loans are secured or have automatic repayment provisions, which may make them easier to qualify for than unsecured loans.

SBA loans

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 the SBA Community Advantage loan 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.

Term loans

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 three years. Medium- and long-term loans may range from three to seven years.

Microloans

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

Lines of credit are revolving lines of credit, similar to business credit cards. This type of financing gives you the flexibility to draw funds multiple times and on an as-needed basis. They may have variable interest rates, which may make repayment less predictable than other loans.

Equipment loans

Equipment loans work similarly to term loans by providing a lump sum and repayment terms typically over one to five years. But this loan 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 

Invoice financing allows business owners to get paid immediately for their clients’ unpaid invoices for a fee. The business submits the invoices to the lender for review, and the lender advances a portion of the total invoice amount. The business then pays the fee once clients make good on the invoice. These loans are often easier to qualify for if you have bad credit because lenders are more concerned with the credit score and repayment history of invoiced clients. 

Invoice factoring 

Invoice factoring works similarly to invoice financing in that the funding is based on outstanding invoices from customers. But instead of collecting payments yourself, you sell the invoices to a factoring company to collect directly from your clients. It then advances capital to your business to use for expenses and collects its own fees once clients pay. 

Merchant cash advance

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.

 

Pros and cons of bad credit business loans

As with any type of financing, bad credit business loans have benefits and drawbacks to consider.

 

Pros:

  • Flexible eligibility criteria. Lenders offering business loans to credit-challenged borrowers typically have more leniency than you’ll find with traditional banks. 
  • Access fast cash. You can get the money your company needs quickly as some lenders offer rapid funding — sometimes the same day or in just a few business days.
  • Helps build credit. If account activity is reported to the credit bureaus, your payment history could improve, and your score will likely increase as you repay the loan. The same applies if the lender reports to the business credit bureaus.

Cons:

  • Loan limits. The amount you qualify for could be far less than what you need since the cap on business loans for bad credit borrowers may be lower. 
  • Borrowing costs. Expect higher interest rates and fees, as bad credit business loans are riskier for lenders due to the elevated chance of default.
  • Collateral requirements. Borrowers may have to put up collateral. If you take out a secured loan, you could lose the collateral you put up if you fall behind on the loan payments.

Who should get a bad credit business loan?

Bad credit business loans are aimed at business owners who don't have good or excellent credit. Even having fair credit can make it hard to qualify for loans typically reserved for business owners with personal credit scores of 670 and above. If you need financing now and can't wait until you've built up your credit score, a bad credit business loan may be your best option. 

 
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Bankrate Insight

When you’re getting any type of loan, especially one specifically for customers with poor credit, you should be on the lookout for scams, malicious actors and bad deals.
 
Some red flags to keep an eye out for are:
 
  • Time pressure. Be wary of any lender advertising time-limited deals that encourage you to get a loan before you have time to think about it.
  • Guaranteed approval. No good lender will approve every application it sees, so if you see this promise, be wary.
  • Upfront fees. Be careful of lenders that ask for upfront fees, such as application fees. You might pay the fee and never hear back.

Alternatives to bad credit business loans

If you aren't sure that a bad credit business loan is right for you, consider these alternatives:

Where to get a bad credit business loan

Many lenders offer business loans for bad credit. The right one for you will depend on the type of loan you need and who offers the best rates. Make sure to shop around before accepting any offer. 

  • Online lenders. Online lenders often specialize in fast approval and funding. Many also work with bad credit borrowers, but their interest rates and fees can be quite high.
  • SBA lenders. These lenders are approved by the Small Business Administration to fund SBA loans. Each lender sets its own requirements, usually wanting a solid credit history. But business owners with bad credit may qualify through community-based lenders or for specialized loans like SBA microloans.  
  • Community Development Financial Institution (CDFI). A CDFI is a lender that specifically aims to serve low-income and other underserved communities. There are more than 1,300 CDFIs in the US, according to the CDFI Fund. They can be a good source of low-cost funds if you plan to start a company in an underserved area.
  • Minority Depository Institutions (MDI). An MDI is an institution that is either mostly owned by minority individuals, or its board members are mostly minority individuals. They typically specialize in lending to minorities more than traditional banks, especially offering SBA loans.
  • Invoice factoring companies. These companies buy unpaid invoices from businesses, advancing cash the business can use for expenses. Some factoring companies also lend other business loans, while others specialize in invoice factoring.
  • Microlenders. You can often find microlenders online or through business groups in your area. They might take longer to fund your loan but can be a good way to get small amounts of cash at reasonable rates.
  • Banks. Many traditional banks offer better rates and fees but may have strict requirements. If you have bad credit, your best chance of qualifying with a traditional bank is likely with the one you use for your business checking account.

Frequently asked questions about bad credit business loans

Methodology

Clock Wait
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To choose the best business loans for bad credit, we ensured all loans featured offered eligibility with a credit score below 630 and are broadly available across the United States. We then considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, required time in business, minimum annual revenue and fees.

Additionally, lenders are reviewed using a 22-point scale. We measure quality in five key areas: Accessibility, affordability, transparency, customer service and flexibility. Based on the results, lenders are given a rating between 1 and 5:

  • 4.5 or higher: Outstanding
  • 4 to 4.5: Excellent
  • 3.5 to 4: Good
  • 3.5 and under: Average