It can be difficult to secure funds for your business when you have subprime credit. However, bad credit business loans are an option if you have bad to fair credit (typically, a credit score of 300 to 669). Bad credit business loans are loans that are specifically designed for business owners with poor credit scores.

Many of these bad credit loans come with high interest rates and short repayment terms, so it's important to compare your options carefully. Read on for our recommendations on the best business loans in 2024 for borrowers with bad credit.

Top 5 Bad Credit Business Loans

We chose our top recommendations for bad credit business loans based on factors such as minimum personal FICO score requirements, geographic availability, and affordability. We also considered loan interest rates, fees, customer service, flexibility in repayment, and transparency.

FundboxNational FundingCrediblyTaycor FinancialOnDeck
Loan AmountsUp to $150,000$5,000 to $500,000$5,000 to $400,000$500 to $2,000,000$5,000 to $250,000
Interest Rates4.66% (12-week term) to 8.99% (24-week term)1.11 Factor Rate1.11 Factor Rate4.99%Starting at 35.40%
Repayment Terms3 to 6 months4 to 18 months3 to 15 months12 to 84 monthsUp to 24 months
Minimum Credit Score600600500550625
  • Loan Amounts: Up to $150,000
  • Interest Rates: 4.66% (12-week term) to 8.99% (24-week term)
  • Repayment Terms: 3 to 6 months
  • Minimum Credit Score: 600

Fundbox offers business financing for startups to cover costs like business registration, hiring staff, and paying utilities. Funding can be done within one business day, and you can pay interest on the amount you borrow.

Best For: Startup business loans

  • Loan Amounts: $5,000 to $500,000
  • Interest Rates: 1.11 Factor Rate
  • Repayment Terms: 4 to 18 months
  • Minimum Credit Score: 600

National Funding offers unsecured loans for bad credit without a down payment or any kind of collateral. Funds can be used for a variety of purposes if you borrow a term loan, but you can also borrow an equipment financing loan specifically for purchasing business equipment.

The Factor rate makes it difficult to compare it with other products, but the company offers a Lowest Payment Guarantee program, which allows you to get cashback if you find a better rate elsewhere (equipment leasing).

Best For: Unsecured business loans

  • Loan Amounts: $5,000 to $400,000
  • Interest Rates: 1.11 Factor Rate
  • Repayment Terms: 3 to 15 months
  • Minimum Credit Score: 500

With its low minimum credit score requirements, Credibly’s bad credit business loans are very accessible. If you’re looking for same-day funding, the company offers merchant cash advances, lines of credit, SBA loans, working capital loans, and many other financing options.

Best For: Quick Funding

  • Loan Amounts: $500 to $2,000,000
  • Interest Rates: 4.99%
  • Repayment Terms: 12 to 84 months
  • Minimum Credit Score: 550

Taycor Financial offers 100% financing for equipment loans, helping you upgrade or purchase equipment for your business. There are no business history requirements, so it’s a good option for startups or businesses with limited credit profiles.

Best For: Equipment financing

  • Loan Amounts: $5,000 to $250,000
  • Interest Rates: Starting at 35.40%
  • Repayment Terms: Up to 24 months
  • Minimum Credit Score: 625

OnDeck offers short-term loans with same-day funding for bad credit borrowers. Business owners can use the funds for purchasing equipment or inventory, business expansion, or any other purpose.

The interest rates are quite high, and you may need to provide a personal guarantee, but your loan payments will remain the same since the rates are fixed.

Best For: Short-term funding needs

Understanding Bad Credit Business Loans

Bad credit business loans are designed for businesses with very limited or poor credit. Compared to traditional business loans, they have more relaxed eligibility requirements.

“If your company is generating solidly positive, consistent monthly cash flows that demonstrate you can repay the loan fairly easily, a potential lender may be less concerned about a low credit score than it would if your firm’s profitability has been sporadic and correlated to the highs and lows of the business cycle in your particular industry or market niche,” says Brad Reichert, founder and managing director of Reichert Asset Management LLC.

Some lenders may offer loans to business owners with a personal credit score of as low as 500. Other requirements, such as minimum annual revenue and length of time in business, may also be more lenient. However, the borrowing cost is typically higher than other, more conventional lending sources.

Borrowers with fair or bad credit (FICO score of 300 to 669) may have to rely on these loans if other options are not available to them.

Types of Bad Credit Business Loans

You can borrow many types of loans, even with bad credit. Some of these may be easier to qualify for compared to others.  

Small Bad Credit Business Loans

Small business loans can be used by business owners to operate or expand their businesses. These loans are available at credit unions, banks, and online lenders. The funds are disbursed as a lump sum, and you can repay it with interest through monthly installments.

Secured Bad Credit Business Loans

You’ll need to offer a liquid financial or a valuable fixed asset as collateral to get secured loan for bad credit. Collateral can help you qualify for a better rate. However, the lender can seize the asset to recover its loan principal and related costs if you default on the loan.

Government Loans for Businesses With Bad Credit

If you have bad credit, you may also qualify for government-backed loan products like microloans and SBA loans.

SBA loans are backed by the Small Business Administration. Some types of SBA loans, such as SBA Community Advantage, have lenient eligibility requirements. Interest rates are usually lower than traditional loans.

SBA Microloans are also easier to qualify for since the loan amounts are smaller ($50,000 or less).  

Lines of Credit

A business line of credit is similar to a business credit card. Once your line of credit is approved, you can withdraw any amount up to the approved limit whenever you need to. You only pay interest on the amount you borrow.

Equipment Loans

Equipment loans are secured against the equipment you’re financing. Interest rates are usually lower, and loan amounts are higher than those of unsecured loans since the loan is backed by collateral.

Merchant Cash Advance

Merchant cash advance companies offer upfront cash to help you meet your short-term financing needs. You can repay it by sending a percentage of your credit and debit card sales to the lender. However, this can be a very expensive form of financing, so it's important not to rely on it regularly.

Invoice Factoring

Invoice factoring is a form of financing in which funding is based on your business's outstanding invoices. An invoice factoring company will offer you advance capital for your business. In return, you’ll sell the outstanding invoices to the factoring company to collect from customers.

Pros and Cons of Bad Credit Business Loans

Like any other type of loan, bad credit business loans have benefits and drawbacks that you should carefully consider.

Pros

  • Lenient Qualification Requirements: Lenders offering bad credit business loans have more relaxed eligibility criteria compared to traditional banks.
  • Helps Build Credit: Your loan activity is reported to the credit bureaus. On-time payments will be reflected on your credit report and can help you improve your credit scores with all three of the major credit bureaus (i.e., Experian, Equifax, and TransUnion).
  • Fast Access to Cash: Many lenders offer quick funding, usually within one business day, if your business needs money quickly.

Cons

  • High Borrowing Costs: Bad credit business loans are risky for lenders, so the fees and interest rates are generally higher than those of traditional business loans available to borrowers with good credit.
  • Lower Loan Limits: Due to the increased level of credit risk for the lender, the loan amount you qualify for will typically be less than traditional loans.
  • Collateral: You may have to offer collateral to qualify for the loan. If you fall behind on payments, you can lose the collateral.  

Can I Get a Business Loan With Bad Personal Credit?

While the cost of borrowing can be higher when your personal credit is low, it’s still possible to qualify for a business loan.

Some lenders specialize in offering small business loans with personal credit scores that are as low as 500. However, you may have to meet other eligibility requirements like annual revenue and minimum time in business to prove your creditworthiness.

Where To Get a Business Loan With Bad Credit

If you don’t meet the loan requirements for traditional business loans, there are many lenders that offer bad credit business loans:

  • Banks and Credit Unions: Your existing credit union or bank may be willing to offer you a business loan if you have an existing relationship with it.
  • CDFIs: Community Development Financial Institutions are dedicated to helping low-income and disadvantaged communities and people. You may qualify for a business loan even with a lower credit score.
  • Microlenders: Microlenders are typically government agencies and nonprofit organizations that offer business funding to help underserved small business owners.
  • Online Lenders: These alternative lenders have less stringent eligibility requirements, an online application process, and quick funding times.

How To Get a Business Loan With Bad Credit

If you have a low credit score, we recommend taking the time to improve it before you apply for a loan. However, if you can’t wait, here are the steps you can follow to get a business loan:

  1. Review your business finances to determine how much you can reasonably afford to borrow, based on your net cash flow, in both good times and in bad.
  2. Check your personal and business credit score before you apply.
  3. Take the time to review the eligibility requirements of different lenders to determine which business lender will likely approve your application.
  4. Compare different options based on loan type, repayment terms, fees, and interest rates.
  5. Consider adding a cosigner or offering collateral to bring down borrowing costs and improve your chances of approval.
  6. Gather relevant documents, such as business financial statements, business and personal tax returns, bank statements, and business plans.
  7. Submit the loan application and wait for approval. Review the business loan agreement carefully before you sign it.

Apply for a Bad Credit Business Loan Today

Bad credit business loans can help you market your business, manage your monthly cash flow, hire staff, pay for new equipment or maintain existing equipment, and expand your operations in general. Qualifying for loans is difficult but not impossible when you have a bad credit score. Learn more about the types of business loans available so you can determine which one fits your needs.

Review our recommended bad credit business loans and compare your business loan options carefully. Most importantly, ensure you’re only taking on as much business debt as you can reasonably afford.