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If you have bad credit, qualifying for a startup business loan might not be challenging. Poor credit can be a red flag to borrowers, who review your credit profile when evaluating your application for a loan. However, it’s possible to find startup business loans for bad credit. Some lenders will work with credit scores as low as 500, while others don’t have a minimum requirement and instead look at your business plan and revenue as a whole.
Best Startup Business Loans for Bad Credit
Best for Funding Options
Biz2Credit
Loan amounts
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
Minimum Credit Score
575 or 650*
*See website for details
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
575 or 650*
*See website for details
Editor’s Take
Biz2Credit is a digital funding platform that provides three funding options—term, revenue-based financing and commercial real estate (CRE) loans—ranging from Up to $1M+. It only takes a few minutes to apply.
Biz2Credit can connect business owners with revenue-based financing Up to $2M+ and term loans Up to $1M+. Revenue-based financing payments are flexible based on business performance, with a right to reconcile against actual business receipts while term loans are repaid through weekly, bimonthly or monthly payments over the course of 12 to 36 months. Biz2Credit also offers interest-only CRE loans from Up to $2M+ with terms between 12 and 36 months; payments are due monthly.
In the event that Biz2Credit cannot provide a financial product, it may present third-party options to qualified prospective borrowers. However, Biz2Credit confirms that “in the vast majority of cases, [it] will make a financing decision without referral to any external party.”
Pros & Cons
- Revenue-based financing has flexible qualification requirements
- Can pre-qualify for submitting an application
- Offers term loans with weekly or biweekly payments
- Does not disclose financing costs
- Does not disclose turnaround time
- High annual revenue requirement
Details
Eligibility
Eligibility varies based on the financing option you choose.
Term loan
- Minimum credit score: 650
- Time in business: 18 months
- Minimum revenue: $250,000 per year
Revenue-based financing
- Minimum credit score: 575
- Time in business: 6 months
- Minimum revenue: $10,000 per year
Turnaround time
Biz2Credit does not disclose the turnaround time for its financing options.
Similar to Funding Circle, Biz2Credit emerges as a more balanced alternative and functions as a platform to offer a wide range of loans. Due to the more thorough underwriting process, the qualification requirements are more restrictive than other business lenders and funding may not be as quick.
— Abid Salahi, co-founder and CTO, FinlyWealth
Best for Fast Funding
QuickBridge
APR range
Factor rates start at 1.11
Factor rates start at 1.11
Editor’s Take
QuickBridge provides small business loans to business owners nationwide. Applying is quick and funding can happen within 24 hours, but you need fair to excellent credit to qualify.
Interest on loans from QuickBridge is expressed as a factor rate. To determine the cost of borrowing, multiply your desired loan amount by the factor rate. For example, if you borrow $30,000 at a factor rate of 1.10, you would owe $33,300 in total with $3,300 in interest. With a loan term of six months, your interest rate would be 22%, but that doesn’t include any fees the lender can tack on.
Pros & Cons
- Flexible repayment options
- Quick application and fast funding deposited to a bank account
- Early payoff discounts
- Loan interest may be high
- $250,000 minimum annual revenue requirement for small business loans
- Only short-term repayment terms are available
Details
Eligibility
- Minimum credit score: 600
- Time in business: Six months
- Minimum revenue: $250,000 per year
Turnaround time
You can apply and receive a decision from QuickBridge on the same day.
QuickBridge, which operates as an alternative lender, provides small businesses with funding within a matter of days. Its thorough approval process involves looking at your business as a whole, more than just your credit score. However, for approval, there’s a minimum credit score requirement of 600 and an annual revenue requirement of $250,000, which isn’t the lowest in the industry.
While the speedy lending process may seem attractive, QuickBridge charges interest as a factor rate starting at 1.10 plus an origination fee in the range of 1% to 5%, making the loans quite pricey.
— Abid Salahi, co-founder and CTO, FinlyWealth
Best for Quick Approvals
Fundbox
APR range
Interest rates start at 4.66%
Interest rates start at 4.66%
Editor’s Take
Fundbox is an AI-powered business lending platform that speeds up the application, decision-making and funding process. It offers decisions within three minutes and funds as soon as the next business day.
Prospective borrowers have two business financing options through Fundbox. Business owners can apply for revolving business lines of credit up to $150,000 with repayment terms of 12 or 24 weeks. Your available credit goes back up as you repay your line of credit.
Pros & Cons
- No prepayment penalty
- Low minimum annual revenue requirement
- Next-business-day funding
- Only short-term repayment terms are available
- Does not disclose APRs
Details
Eligibility
- Minimum credit score: 600
- Time in business: Six months
- Minimum revenue: $100,000 per year
Turnaround time
With a business line of credit from Fundbox, you can receive your funds as soon as the next business day.
The approval process is quick and Fundbox is available for the credit-challenged business. Credit approvals are usually small, so this [typically] isn’t an option for larger purchases. I had a small business client that had Fundbox integrated with her Stripe dashboard, which made it convenient.
— Herman Thompson, Jr., advisory board member
Best for Product Availability
Rapid Finance
Editor’s Take
Rapid Finance is an online lender that has funded over $2 billion in business financing across a variety of industries. Business owners looking for unsecured loans can access a wide variety of options, including term loans, lines of credit, merchant cash advances and invoice factoring.
Rapid Finance unsecured loans range from $5,000 to $1 million with terms from three to 60 months, depending on the specific type of loan. However, business owners with bad credit typically won’t receive the largest loan amounts. What’s more, borrowers are required to meet daily or weekly repayment schedules.
To apply, applicants will need a form of identification, business bank account number and routing information, and their last three months of business bank statements.
Pros & Cons
- Loans up to $1 million
- Less stringent minimum qualification requirements
- Fast closing and funding
- Doesn’t disclose APRs or monthly fees
- Maximum terms of five years
- Smallest loan amount is $5,000
Details
Eligibility
- Minimum credit score: 550
- Time in business: At least six months
- Minimum monthly revenue: $5,000
Turnaround time
Rapid Financing says it funds 90% of its loans within 24 hours, but it can take up to two days in some cases.
Best for Loan Options
Credibly
APR range
Factor rates as low as 1.11
Factor rates as low as 1.11
Editor’s Take
Credibly offers a wide range of business loans for bad credit—working capital loans, business lines of credit and merchant cash advances, specifically. What’s more, new businesses may also find it easier to secure financing because Credibly only requires businesses to be in operation for at least six months.
Working capital loans of up to $600,000 are available with terms between 6 to 24 months; payments are due daily or weekly. If a business owner should choose a business line of credit, they can access credit lines up to $250,000. Lastly, Credibly offers merchant cash advances (MCAs) up to $600,000 with terms between 3 to 24 months.
Pros & Cons
- Wide variety of loan products
- Low credit score requirement
- Fast funding times
- Lowest loan amount is $5,000
- Requires daily or weekly payments
Details
Eligibility
- Minimum credit score: 500
- Time in business: At least six months
- Minimum revenue: At least $15,000 in average monthly bank deposits
Turnaround time
Credibly offers same-day approvals and same-day funding once approved.
Best for Crowdfunding Up to $15,000
Kiva
Editor’s Take
Kiva is a microlender that offers a unique crowdfunding platform for a wide variety of prospective borrowers. Compared to traditional financing, Kiva utilizes your personal network and its own network of 1.6 million investor lenders to crowdfund loans up to $15,000 with terms up to 36 months.
Business owners who apply directly through Kiva’s website may receive 0% interest. Kiva refers to these as Direct Loans, which are only available to businesses in the U.S. and social enterprises internationally. However, if a prospective borrower applies through a Kiva Field Partner—local organizations working in communities to vet borrowers, provide services and administer loans—they will likely pay interest to the partner in some form, which varies by partner.
Loan funds are distributed and repaid through PayPal or Kiva’s Field Partners.
Pros & Cons
- No minimum credit score requirement
- Does not require cash flow documents
- Requires no collateral
- Maximum loan amounts of $15,000
- All loans are crowdfunded
- Long funding times
Eligibility
Because Kiva uses a crowdfunding method, it’s able to offer less stringent qualification requirements. Although Kiva loans don’t require a minimum credit score, cash flow documents or collateral, borrowers are vetted or endorsed by either a local Field Partner, Trustee or members of the community.
Turnaround time
After you submit your application, a Kiva representative will get back to you within 10 to 15 business days. Kiva suggests that “submitting a great photo and business story will help your application make it through the review process more quickly.”
Once you’re approved for fundraising, you have 15 days to raise funds from your own network, and then 30 days to publicly fundraise with Kiva’s network of lenders.
Summary: Best Startup Business Loans for Bad Credit
Tips to Compare Startup Business Loans for Bad Credit
As you shop around for a startup business loan, consider these tips:
- Find out the credit requirements. Every lender sets its own minimum credit score, so look for one that could be a good fit for your credit profile. Be wary of lenders that promise loans with no credit checks, as they may be predatory lenders that will charge sky-high rates and fees.
- Research other lender requirements, too. Some lenders may want to see a certain amount of business revenue or personal income before approving you for a loan. Requirements may be higher for bad-credit borrowers, as a lender wants to reduce the risk that you’ll default on your loan.
- See how high the interest rates go. With bad credit, you’ll likely get assigned higher rates on a startup business loan. Check out a lender’s range to make sure the rates don’t climb into unaffordable territory.
- Compare repayment terms and schedule. Find out how long you have to pay back the loan and whether you have to make payments on a daily, weekly or monthly basis.
- Watch out for loan fees. Extra fees can add to your costs of borrowing, so make sure there aren’t any surprise charges hidden in the fine print.
- Explore the lender’s customer service options. Ideally, you’ll find a lender that offers responsive customer support and a variety of contact options, such as phone, email or instant web chat.
- Read customer reviews. Finally, take some time to read reviews on respected sites like Trustpilot to see what other borrowers have to say about their experience with a lender.
What Is Considered a Bad Credit Score?
When you’re borrowing a startup business loan, your business might not have built much of a credit score yet. As a result, your personal credit score will carry greater weight in your application.
On the FICO scoring model, a credit score of 580 or below is considered poor. Credit scores of 580 to 669 are considered fair, though applicants with these scores may still be considered subprime borrowers.
Some lenders offer bad credit startup business loans to business owners with credit scores starting at 500. Others have higher requirements of 550 or 600.
As mentioned, poor or fair credit may mean you get saddled with higher interest rates. You’ll need a good score of 670 or higher to qualify for more competitive rates.
How to Get a Startup Business Loan With Bad Credit
Every lender sets its own requirements, but the process of applying for a startup business loan will probably be similar across the board. Here are the general steps you’ll need to take:
- Review your credit profile. By knowing your credit score, you won’t waste your time with lenders who set higher score minimums. You can also go to AnnualCreditReport.com to request free copies of your credit reports from the three major credit bureaus—Equifax, Experian and TransUnion—to see if they contain errors that can drag down your credit score.
- Work on improving your credit, if you have time. If you don’t have an immediate need for a startup business loan, take some time to improve your credit score. Disputing errors on your credit reports, reducing your credit utilization ratio, paying down debts and making on-time payments on loans can all help your score.
- Prepare your documentation. You’ll need to provide documents such as your business plan, bank statements, business licenses and more to qualify for a loan. If you have bad credit, a lender may closely examine your revenue or business plan to ensure you can repay your loan on time.
- Consider adding a co-signer or collateral to your loan. Qualifying for a startup business loan with bad credit on your own may be difficult. Adding a co-signer to your loan or securing the loan with collateral may make it easier to get approved. But be warned: If you find yourself unable to pay the money back, you can lose your collateral or destroy your relationship with your co-signer, who will be left on the hook for the loan.
- Shop around with multiple lenders. Since your bad credit may lead to higher interest rates, it’s important to compare more than one offer for a startup business loan to minimize your costs of borrowing.
- Submit a formal loan application. Once you’ve found a lender willing to work with you, submit a full application. The lender may contact you if it requires additional documentation to approve your loan.
Types of Startup Business Loans for Bad Credit
Every lender sets its own borrowing requirements, so don’t assume that subprime credit will disqualify you from a startup business loan. Here are some types of loans you may be able to obtain:
- Term loans. Banks, credit unions and online lenders offer term loans that you can pay back over a period of time, often anywhere from three months to 10 years. Online lenders may be more lenient than banks about credit score requirements and can often offer faster funding times, too.
- Secured loans. A secured startup loan requires you to put up an asset as collateral. Secured loans may have more flexible credit requirements than unsecured ones because the lender can recoup your asset if you fall behind on payments.
- Business lines of credit. While a business loan offers a lump sum of funding upfront, a business line of credit lets you draw out funds as you need them and pay them back on a revolving basis, often for up to five years.
- Working capital loans. A working capital loan is a short-term loan you can use to cover day-to-day operations. It may be easier to qualify for than a long-term loan if you have bad credit.
- Equipment financing. This helps you purchase equipment for your business. It’s typically a secured form of debt that uses your equipment as collateral.
- Invoice factoring. Sell unpaid invoices to a factoring company at a discounted price in exchange for immediate cash.
- Merchant cash advances. Receive a lump sum upfront that you’ll pay back with automatic deductions from your future credit and debit card sales.
While the lowest interest rates are reserved for the most creditworthy borrowers, you’re not necessarily out of luck if you have bad credit. Your rates may be higher, but it could still be possible to qualify for a startup business loan.
Make sure to review your loan offer before borrowing, as you wouldn’t want to take on expensive debt you can’t afford to pay back. Compare your options for startup business loans for bad credit carefully to make the best financial decision for you and your company.
Methodology
We reviewed 16 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 25%
- Loan details: 25%
- Eligibility and accessibility: 20%
- Customer experience: 20%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time-in-business requirements. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.
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