If you have bad credit and can’t get a bank loan, there are alternative options. Below, we review and compare four of the best bad credit business loan options for those with credit scores under 600.
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Fastest Bad Credit Business Loans: OnDeck
If you need a business loan quickly but have a low personal credit score or poor credit history, we recommend OnDeck. They care less about your personal credit score and more about your business’s recent revenues. They’ll lend up to $500K with terms as long as 3 years. Plus, their minimum credit score requirement is 500.
Best Bad Credit Business Loans: Accion
We recommend that people with poor credit or limited credit histories consider Accion. You can borrow up to $50,000 for up to 5 years, and can be approved with a credit score as low as 525. Accion loans are available for startups and established businesses and carry relatively low interest rates.
Type of Loan
Merchant Cash Advance
Minimum credit score
Other qualification criteria
In business for at least 9 months, and at least $75K in annual revenues.
Depends on type of loan you apply for. Loans over $5000 require at least 6 months in business.
Any registered US business with US bank account and SSN may qualify.
At least 3 months in business, $2,500 in monthly credit card sales, and 1 year left on lease.
Time to get initial approval
2 business days
Time to get funds after approval
As fast as 1 business day
1-3 business days
3-5 business days
How much can you borrow?
$5K to $500K. You can typically borrow 10-15 % of your business’ annual revenues.
$500 to $50K
$300 to $50K
$5K to $500K.
You can typically qualify for up to 85-250 % of your monthly credit card sales volume. Lower amounts if shorter time in business.
For how long can you borrow?
6 months to 5 years
Until paid back
30 % to 50 %
18 % to 35 %
Around 33 %
50 % to 80 %
Personal Guarantee Required?
No, but a lien is placed on your business assets.
Why We Recommend Accion For Business Owners With Poor Credit:
Business owners who have been rejected by banks due to poor credit should consider Accion as a first alternative. Accion has reasonably priced loans, which are very hard to come by if you have poor credit. With a credit score of at least 525, you can borrow $500 to $50,000 for up to 5 years. Bonus: there are special programs for small loans up to $2,500 if you’re just starting out and have no credit history.
Do keep in mind that Accion’s underwriting process is significantly slower than the other three options reviewed here, and it requires more paperwork on your part. For example, if you’re applying for a startup loan, you need to provide a business plan. Other loans require a cosigner and proof of independent income.
Accion has several branches throughout the nation. Contact your local office for more information.
See Our Full Accion Review
When to Try OnDeck: Large, Short-Term Loans
OnDeck may be the best option for business owners who need large loans (up to $500K) but have poor credit (minimum 500). OnDeck loan terms range from 3-36 months. Fast turnaround time, as fast as 1 business day, also makes OnDeck an attractive option. OnDeck is more expensive than Accion, but if you need a large loan and need it fast, it’s probably your best bet. That is why we recommend OnDeck as the best provider of short term business loans.
Kabbage is another provider of fast, short-term business loans. The loans are structured as a line of credit that is paid back in 6 months or less. It’s easier to qualify for Kabbage than OnDeck, but the maximum you can borrow through Kabbage is $100K. You can apply for a Kabbage line of credit here.
When to Try Behalf: Small Line of Credit for Purchase Financing
Behalf has a unique business model where they will pay vendors directly for items that you want to purchase. Then, you pay back Behalf. The loan works like a line of credit, so you can borrow more as you pay back. It can be used to buy supplies, inventory, equipment, services, and more.
Behalf does check your credit, but the company does not specify a minimum. About 40 % of businesses that apply for a Behalf loan are approved, and no personal guarantee or collateral are needed.
While Behalf is great for businesses that need to make small purchases, you can only borrow a relatively small amount of money ($300-50,000) and over a short term (1-6 months). In addition, you can’t use it for certain expenses, such as payroll or monthly rent for your office space.
For businesses that want to finance the purchase of inventory, Kickfurther is another great option. With no credit score requirements, Kickfurther can help you stock the shelves as long as you have a history of selling the product.
See Our Full Behalf Review
When to Try RapidAdvance: Credit/Debit Card Receivables
RapidAdvance provides merchant cash advances to business owners with a credit score over 500, 3 months of business experience, and at least $2,500/month in credit card sales. With a merchant cash advance, you get a lump sum payment and repay the loan by giving a small portion of your daily credit card sales to the lender. Generally, providers of merchant cash advances care less about your credit score and more about the volume of your credit card sales.
A lot of businesses like merchant cash advances because your payments go up and down based on your credit card sales, and you don’t have to worry about a fixed monthly payment or a maturity date. However, we recommend this option only if you’ve exhausted all other avenues because of how expensive it is. The annual interest rate for RapidAdvance is between 50 % to 80 % and can be even higher depending on the fees that you’re charged and how long it takes you to repay the loan.
More Options For Those With Bad Credit
We couldn’t cover every loan option available for those with poor credit. If the four lenders covered here aren’t exactly what you need, here are some alternatives.
If you need a loan to address cash flow problems, try Fundbox. Fundbox advances you cash for unpaid invoices. Fundbox requires no credit check.
If you need funds to restock inventory, Kickfurther can help. They’re a marketplace lender that will buy the inventory for you and let you focus on selling the product.
Small, one-time purchases can be charged to a business or personal credit card. Secured business credit cards, such as the Wells Fargo secured business credit card, are designed for people with poor credit. There are secured personal credit cards for those with poor credit as well. With an average APR around 15 %, this option can actually be cheaper and faster than securing a loan.
If you’re interested in building or repairing your credit score, read our reviews of credit repair companies. Or contact our recommended provider, My Credit Group, for a free consultation to review your credit.
Minimum Credit Score & Other Qualification Criteria
Before applying for a loan, ensure that you meet the lender’s minimum qualification criteria. If you haven’t checked your credit recently, now’s the time to do it. Check your credit score for free here.
On paper, Behalf is the easiest to qualify for. They don’t have a required credit score minimum, and about 40 % of businesses are approved for a Behalf loan. They use a proprietary algorithm that checks social media data and other data about your business that’s available on the web. OnDeck, RapidAdvance, and Accion require credit scores at least of 500, 500, and 525 respectively.
You should not look at credit score in a vacuum. For example, Accion requires a credit score of only 525, but you’re not guaranteed to qualify with that score. Accion has other qualifying factors as well. Depending on which type of loan you apply for, you may need to provide a cosigner, business plan, or proof of independent income.
Behalf: Any registered US business with bank account and SSN is eligible. No credit score minimum. Vendors must have a Behalf account. Behalf will work with you and your vendors to get this set up.
OnDeck: 500 or higher personal credit score, at least 9 months in business, and at least $75,000 in annual business revenue are required to qualify.
RapidAdvance: 500 or higher personal credit score, at least 3 months in business, and average credit card sales of at least $2,500 are required to qualify. You must also be a brick-and-mortar business with at least 1 year left on your lease (if you rent your business space).
Time for Approval and Funding
If you meet the minimum qualification criteria, you can apply for a loan. You can apply online for each of these four lenders.
Fortunately, all four lenders take just minutes to determine to pre-approve you for a loan.
Once you’re pre-approved, the time to get funds varies based on lender. Accion takes the longest at 2-3 weeks, and you will be ‘interviewed’ by one of their loan specialists to ensure that you’re a good fit for an Accion loan. The other three lenders will get funding to you within a few business days.
If getting a loan fast is your main priority, check out our guide to the Fastest Business Loans.
Accion: You can apply online, via fax, via mail, or in-person at an Accion office. The online application is fast – it takes about 10 minutes, and you’ll be notified right away if you pre-qualify. After that, a loan specialist will interview you by phone and may request additional documentation. It takes approximately 2-3 weeks to receive final approval and funding.
Behalf: The online application takes just 60 seconds, and you find out instantly if you are pre-approved for a loan. After that, you must specify which vendors you want Behalf to pay on your behalf. If they don’t have a vendor account already, Behalf will work with you and the vendor to get this set up. This takes 1-3 business days.
OnDeck: You can apply online or over the phone for an OnDeck loan. The loan application takes approximately 10 minutes, and you will find out right away if you’re pre-approved. You can access the funds in as little as 1 business day after that (if you choose wire transfer; ACH takes 2-3 business days).
RapidAdvance: You can request a free quote online and a RapidAdvance specialist will follow up with you via phone and email. After you submit your application, you can expect to get a response in 48 hours. Funding takes about 7 days.
How Much Can You Borrow?
Keep in mind that most lenders will lend you money based on your business’ revenues. For example, a business that makes $200,000 in annual revenues will be able to borrow more than a business that makes just $20,000 annually. The cap is usually 15 % of your business’ annual revenues.
Accion: Borrow $500 to $50,000. The amount you can borrow depends on how long your business has been operating. Startups with less than 6 months in businesses can only qualify for small loans up to $5,000.
Behalf: Borrow $300 to $50,000. This is a line of credit, so you can borrow more as you repay the loan.
OnDeck: Borrow $5,000 to $500,000. You can typically qualify for a loan that is 10 % to 15 % of your business’ annual gross revenues.
RapidAdvance: Borrow $5,000 to $500,000. Usually, you can qualify for around 85-250 % of your monthly credit card receivables.
For How Long Can You Borrow?
If your business is struggling financially, the amount of time that you borrow for is important. You can lower your monthly payments by borrowing for a long time. Accion offers the longest terms for repayment, anywhere from 6 months to 5 years. However, be aware that the longer you borrow for, the higher the cost of the loan will be.
Accion: Borrow for 6 months to 5 years. You can initiate payment, or Accion can deduct a fixed monthly payment from your business bank account.
Behalf: Borrow for 1 to 6 months. You can choose whether to have a weekly, monthly, or one-time repayment. Behalf automatically deducts the payment from your bank account.
OnDeck: Borrow for 3 to 36 months. Payment is automatically debited from your bank account on a daily or weekly basis.
RapidAdvance: Borrow until you pay the loan back. There is no fixed maturity date. A set percentage (20 % is average) of your credit and debit cards sales is automatically deducted at the close of every business day.
Loan Costs: APR and Fees
Perhaps the most important consideration when borrowing money is the cost of the loan. Make sure that you’re not borrowing more than you can afford to pay back, and be aware of all fees and interest before you agree to the loan.
To compare loan costs, we have calculated the APR (annual percentage rate) for each lender. APR takes interest and fees into account and tells you the cost of the loan over the course of one year.
The APR for Accion loans ranges from 18 % to 35 %. This is significantly higher than what a bank would charge (6 % to 7 %). However, among loans that are open to those with poor credit, Accion’s interest rates are surprisingly low. Banks usually require excellent credit (above 700) and focus on lending large amounts of money. Learn more about Accion loan costs here.
The APR for Behalf loans is around 33 %. They charge a fee for every month that you borrow funds, so you can save money by paying off the loan early. You can also earn a discount based on the repayment schedule you select. Find out more here.
The APR for OnDeck loans ranges from 30% – 50 %. A small set of very creditworthy borrowers and repeat borrowers can qualify for better rates. While this is higher than Accion, OnDeck is also much faster in closing loans than Accion. Learn more about OnDeck costs here.
The APR for a RapidAdvance merchant cash advance ranges from 50 % to 80 %. This is actually pretty good for a merchant cash advance–some merchant cash providers charge triple digit APRs! Merchant cash advance lenders charge a fee for their service called a factor rate. Learn more about that here.
Personal Guarantee and Collateral
Though every business owner hopes to be able to pay off a loan on time, unexpected things can happen sometimes. Banks typically require collateral as security for a loan in case you can’t pay it back. None of the lenders reviewed here require specific collateral. However, OnDeck does place a lien on general business assets, so your business assets can be seized if you default on the loan.
If you personally guaranteed a loan, your personal assets (e.g. your home, car, or retirement accounts) can be taken from you if you default.
If you’re not prepared to pledge your business and personal assets, we recommend choosing an unsecured loan. Behalf loans and merchant cash advances from RapidAdvance are unsecured.
Accion requires a personal guarantee but doesn’t require collateral (though providing collateral can strengthen your loan application, according to company reps).
Behalf requires neither collateral nor a personal guarantee.
OnDeck requires a personal guarantee and places a lien on general business assets.
RapidAdvance: You do not have to provide a personal guarantee or collateral for a RapidAdvance merchant cash advance.
Business owners with poor credit shouldn’t be discouraged if they are rejected for a bank loan. There are several other available options, starting with Accion, our recommended provider. If you have at least a credit score of 525, you can qualify for an Accion loan. Both old and new businesses are eligible, and you can borrow up to $50,000 for up to 5 years.
While the lenders above may provide limited funds to those with credit scores below 620, business owners should actively work to raise their credit scores. Credit repair companies, like our recommended credit repair company My Credit Group, may be able to help you increase your credit score.
The other options are also worth considering. Behalf is a good choice for financing purchases of goods and services and works kind of like a credit card. It requires no credit check. OnDeck provides large but short term loans for those with a credit score of at least 500. If all else fails, you can try a merchant cash advance from RapidAdvance. It is quite expensive but a fast and convenient way to get capital if you process a large volume of credit card sales.