Borrowers with credit scores below 600 have difficulty qualifying for financing. Every lender checks your credit score. However, lenders offering the best business loans for bad credit evaluate additional aspects of your business to get you qualified. We evaluated online lenders and selected the best bad credit business loans to save you time when applying.
Top 6 Bad Credit Business Loans 2019
|Fundbox||(Best overall) If you need the lowest minimum qualifications (read more)|
|OnDeck||Financing large projects with long repayment terms (read more)|
|LoanBuilder||Getting customized terms down to the number of weeks (read more)|
|Kabbage||Monthly instead of daily or weekly payments for recurring cash flow shortfalls (read more)|
|BlueVine||Getting financing based on outstanding B2B or B2G invoices (read more)|
|National Funding||Cash flow issues for companies with high credit card revenues (read more)|
When to Use a Marketplace
We’ve listed the top 6 lenders for working capital loans that we believe are the best choices for small businesses. If none of these lenders address your financing needs or you would like to submit a single application for multiple offers, a marketplace is the best way to do that. It takes a few minutes and some basic information to apply and review your loan options.
How We Evaluated the Best Business Loans for Bad Credit Borrowers
When evaluating the best loans for businesses with bad credit, we emphasized credit requirements, total costs, and the flexibility of terms. According to a survey of small business owners by the Federal Reserve In 2018, 50% of business owners could not get traditional financing due to their credit score and needed convenient, inexpensive, quick, and flexible options. The same year, a different survey found that 54% of small business owners with poor credit worked with online lenders.
Based on the needs of bad credit business loan borrowers, the criteria we used to evaluate the best loans include:
- Credit score requirements: Loan approval is based on the personal credit score of the owner(s) of the business. We selected lenders with minimum credit score requirements of 600 or less for this list, which meant we focused primarily on alternative lenders.
- Total cost (APR): How much the bad credit business loan will cost you. You can expect higher costs from alternative lenders, according to a Harvard Business School study. This is because they are willing to extend credit to borrowers with lower credit scores compared to traditional lenders.
- Loan terms: We considered loan terms to see which loans provided the most options for borrowers as it relates to the amount of working capital you could borrow, the term of the loan, and repayment options available.
- Qualification requirements: What factors, besides credit score, the provider considers when qualifying you, such as time in business, annual revenue, collateral, and personal guarantee requirements.
Fundbox: Overall Best Business Loan for Bad Credit
Fundbox offers a revolving line of credit you can draw against without having to reapply. Funding is available in 24 hours for up to $100,000 at 10% to 79% APR. Additionally, Fundbox only requires six months in business and has no minimum credit score requirement, making it the lender with the lowest minimum qualifications on our list.
Fundbox does not provide a range for its fees, stating only its lowest rates on its website. Based on the lowest possible APR of 10%, provided to us by Fundbox, the starting costs for a $10,000 Fundbox bad credit business loan is $466. Fundbox gives you the opportunity to repay your loan early and save some money, similar to Kabbage.
Fundbox disclosed its APR range when we requested it, citing APRs from 10% to 79% for its line of credit. This makes it one of the lowest cost lenders on our list of bad credit business loans, especially since you only pay interest while the debt is outstanding, instead of the entire term.
Fundbox lines of credit have repayment terms of 12 or 24 weeks with weekly payments. Although Fundbox’s terms are shorter than other providers, it offers a line of credit like Kabbage that allows you to draw on additional funds after repayment. This is important for poor credit borrowers because it reduces the number of hard credit checks and avoids needing to reapply for a loan.
By offering two options for repayment, business owners can tailor their loan amounts more closely to their needs. With a maximum loan amount of $100,000, and the flexibility to draw as much as needed, the Fundbox line of credit can help businesses that qualify with short-term financing.
There is no minimum credit score requirement with Fundbox, and you can qualify if you have been in business for at least six months. Fundbox will perform a custom-built business health assessment to determine your qualifications. This potentially makes Fundbox one of the least restrictive online lenders, which already collectively have a 62% approval rate for employer businesses and 45% approval rate for solo businesses, according to a Consumer Financial Protection Bureau study.
When evaluating lenders, we put emphasis on the required qualifications to ensure that we recommended lenders addressing the needs of the widest range of borrowers. Besides offering a no minimum credit business loan, Fundbox also stands out because it prefers to fund businesses with ideally $50,000 in annual revenue, which allows smaller businesses to qualify for financing.
What Fundbox Is Missing
The largest downside with Fundbox is its $100,000 maximum loan amount. This might be plenty of financing for many businesses, but others will need larger loans. In addition, the weekly payments could be difficult if your business has cyclical cash flow, whereas Kabbage might be a better fit because it offers monthly payments.
We determined Fundbox has mostly positive ratings. Positive Fundbox reviews said the company had a helpful customer service team. Critical Fundbox reviews came from users who were approved for less funding than they expected. Read more on our Fundbox reviews page.
OnDeck: Best Bad Credit Business Loan for Large, Long-term Projects
OnDeck offers business loans to small businesses with less than perfect credit (at least 600) for up to $500,000. It offers terms up to three years, which is three times as long as LoanBuilder. This makes it the best bad credit business loan for long-term projects, with starting rates of 9% and funding available in one to three business days. Besides a term loan, OnDeck also offers a line of credit.
OnDeck is transparent with its rates, offering information on the weighted average rate for borrowers, which was 49% in the quarter ending in June 2018. The APR for OnDeck loans ranges from 10% to 100%, which we found to be comparable to similar lenders like LoanBuilder, which has a lower credit score requirement.
You will have to pay between $1,000 and $10,000 in interest on a one-year, $10,000 loan with OnDeck, making it a relatively inexpensive financing option if you qualify. You don’t have the option to save money if you repay early, like with Kabbage. However, OnDeck offers the longest loan terms among the bad credit business loans for up to three years.
With an OnDeck loan, you can borrow up to $500,000 with repayment terms between three and 36 months. Depending on your credit profile, you can repay your loan with daily or weekly payments.
The quick funding from OnDeck is like the other loans we evaluated in our search for the best business loans for bad credit borrowers. Most of the loan options also have comparable collateral and personal guarantee requirements to OnDeck, which allows it to offer less restrictive qualifications than traditional lenders.
OnDeck qualifications are stricter than Fundbox’s, but its credit score requirement of at least 600 makes it available to poor credit borrowers. If you have a high enough credit score, have been in business for at least one year, and have at least $100,000 in annual revenues, then you’ll meet OnDeck’s primary minimum qualifications for funding.
The OnDeck line of credit is a viable alternative to our recommended bad credit business loan. You can get it in addition to the term loan and use it to address any short-term cash flow needs that arise. OnDeck and BlueVine are the only lenders that offer both lines of credit and term loans; however, OnDeck has slightly lower rates at the top end with similar minimum qualifications.
What OnDeck Is Missing
While there are no prepayment penalties with OnDeck, you do not benefit from paying off your loan early. This is because the amount you owe is determined at the time your loan is originated. You will owe the full interest charge if you pay early, unlike Kabbage and Fundbox, which allow you to reduce your overall cost with early repayment.
OnDeck generally has positive ratings. Users who gave OnDeck Capital positive reviews cited its professional and friendly customer service, along with its quick loan process. Users who gave critical OnDeck Capital reviews said its fees were costly compared to other similar lenders. Read more on our OnDeck reviews page.
LoanBuilder: Best Bad Credit Business Loan With Customizable Terms
LoanBuilder is the best poor credit business loan if you need the flexibility of selecting 13- to 52-week terms on loans up to $500,000, at a similar cost to OnDeck with APRs starting at 12%. If you have a 550 or greater credit score and more than $100,000 in annual revenue, LoanBuilder can fund you in one to three business days.
The most recent disclosure of interest rates from LoanBuilder was between 2.9% and 18.72%. Rather than assigning an interest rate to borrowers, you will have the option to select your loan amount and repayment terms, for which you will receive a corresponding interest rate. We estimated its APR to be in line with similar providers, ranging from 12% to 136% based on the interest rate.
LoanBuilder charges a fixed fee for its loans, instead of interest over time, which makes it more important to select the right terms. Based on the fee you are offered, your overall cost of capital would be your fee times the loan amount. For example, a $10,000 loan with a 25% fee would cost you roughly $2,500 in interest. Repaying your loan early has no additional benefit because the repayment cost is fixed, but LoanBuilder makes up for this by offering the term flexibility that allows businesses to plan their repayment ahead of time.
You can borrow $5,000 to $500,000 from LoanBuilder with repayment terms from 13 to 52 weeks in 24 hours. LoanBuilder automatically deducts loan payments weekly and you can pay off your loan early without additional penalties. Like other lenders on our list, LoanBuilder requires a blanket UCC filing and personal guarantee.
In our evaluation, LoanBuilder received high marks for the flexibility it offers when selecting a loan. Once approved, you will select a loan amount that will have a corresponding term and interest rate that fits your business needs. However, you will need to make weekly payments on the loan, which is more frequent than a provider like Kabbage, which offers monthly payments.
Minimum qualifications for a LoanBuilder loan are among the lowest of short-term business loan providers. It requires a credit score of at least 550 for the primary borrower, nine months or longer in business, and at least $42,000 in annual revenue.
The annual revenue requirement was the lowest we evaluated for our list of the best bad credit business loans. Additionally, the minimum time in the business of at least nine months was roughly average compared to other options we evaluated. This gives smaller and newer businesses an opportunity to qualify for a customizable funding option.
What LoanBuilder Is Missing
Newer businesses may find the nine-month time in business requirement for LoanBuilder too restrictive and may be better served by Fundbox, which only requires six months in business. Additionally, LoanBuilder only offers repayment terms up to a year, which is three times as short as OnDeck, which offers terms up to three years.
We compiled LoanBuilder user reviews from around the web. In so doing, we determined LoanBuilder generally has positive ratings. Customers who provided positive reviews cited the quick and efficient application and funding process. Customers who provided negative LoanBuilder reviews were disappointed with the high cost of the loan. Read more on our LoanBuilder reviews page.
Kabbage: Business Loan for Bad Credit With Monthly Payments
Kabbage is a short-term working capital lender that offers a business line of credit of up to $250,000 that’s best for businesses needing monthly payments. The starting APR is 24%, which is higher than some other providers, but you can repay it early to save money. You’ll need a 550 credit score or higher to qualify and get funding as soon as the next business day.
The Kabbage line of credit APR, which includes all interest rates and fees, ranges between 24% and 99%, based on our estimates. This includes a loan fee rate of 1.5% to 10%, which makes Kabbage more expensive than Fundbox and OnDeck. A Kabbage loan will cost between $2,400 and $9,900 over the course of a year if you borrow $10,000.
Kabbage is transparent about its costs, going as far as mentioning both its highest and lowest rates and providing a calculator to borrowers on its website. The fee is charged on a monthly basis, so early repayment allows you to save some money and potentially reduces the overall cost of the loan. There is also no prepayment penalty with a Kabbage loan, so you can pay your loan off early and save on monthly fees, similar to Fundbox.
Kabbage offers up to $250,000 in funding, with repayment terms of six, 12, or 18 months and a monthly repayment cycle. The wide range of potential loan amounts you can receive, along with the variety of repayment terms, help Kabbage match you to the right financing amount for your business. In an interview with Rob Rosenblatt, Head of Lending at Kabbage, he emphasized the lender’s focus on providing the right funding amount to small businesses.
The terms offered by Kabbage stand out because of its monthly repayment options. This gives an option for businesses that are waiting to collect payments or have some seasonality to its cash flows. Furthermore, a Harvard Business School study found that 70% of small business owners needed $250,000 or less to fund their business, making Kabbage a great choice.
The minimum qualifications are a 550 or higher credit score, at least one year in business, and a minimum of $50,000 in annual business revenue. Compared to LoanBuilder, its minimum qualifications are slightly stricter, requiring at least a year in business and a 550 or higher credit score. This makes Kabbage a good option to consider for its monthly payments and low minimum annual revenue requirements.
The credit score requirement for Kabbage is 550, which is low considering the terms of repayment it offers. However, it’s higher than a lender like National Funding, which has no minimum requirement. If you are unsure of how much you need to borrow and can meet the qualifications, receiving a line of credit can prepare your business to meet financing needs when they come up.
What Kabbage Is Missing
Kabbage does not offer additional financing options and has a relatively high starting interest rate. As an alternative, consider OnDeck, which offers a term loan with repayment terms up to 36 months in addition to a line of credit to meet the needs of small businesses. Also, while low at 550, Kabbage sets a minimum credit score requirement, which Fundbox does not do.
Kabbage has mostly positive ratings. Users who gave positive reviews said its customer service provided clear explanations and guided them through the borrowing process. Negative Kabbage reviews expressed disappointment about not being approved for funding or cited higher than expected rates, but Kabbage discloses its rates upfront. Read more on our Kabbage reviews page.
BlueVine: Best Bad Credit Loan for B2B Invoicing Businesses
BlueVine is a great option for businesses with outstanding business-to-business (B2B) or business-to-government (B2G) invoices over $5,000 due in the next 90 days. It requires at least a 530 credit score and three months in business to be considered. Its invoice factoring facility has the highest loan limit we evaluated at $5 million and a low starting APR at 13%. BlueVine also offers a term loan and lines of credit up to $250,000 for supplemental financing.
BlueVine invoice factoring costs start at 0.25% per week, which is potentially the least expensive option if your invoices are maturing soon. It will advance 85% to 90% of each invoice upfront, and once the customer pays off the invoice, it will pay you whatever remains after fees are taken out.
BlueVine was transparent about its fees when we called, reporting its highest rates to be 1.35% per week on invoice factoring and provided us with an APR range of 13% to 70%. Factoring $10,000 in invoices will cost from $320 to $1,700 over the course of 90 days. Compared to OnDeck, BlueVine offers shorter terms but allows much higher borrowing limits.
Invoice factoring with BlueVine is available for up to $5 million per month in invoices. You’ll typically receive 85% to 90% of the invoice value upfront. When your customers repay the invoices, you’ll receive the difference less a fee. The application for BlueVine invoice financing takes 10 minutes to complete, with funding available as soon as the next business day.
Compared to other loans we evaluated, the loan amounts for BlueVine stood out. One downside is the B2B and business-to-government (B2G) invoicing requirement, making the loan inaccessible for some small businesses. However, for qualified businesses with a high volume of invoices, the $5,000,000 maximum is the highest loan amount on our list.
BlueVine only requires a minimum 530 credit score, at least $100,000 in annual revenue, and three or more months of business history to qualify for invoice financing. You also need to invoice creditworthy B2B or B2G customers, since their repayment pays off the loan.
The annual revenue requirements to qualify for BlueVine invoice factoring are tied for highest on our list with OnDeck. However, in our evaluation, the relatively short amount of time in business and low credit requirements make BlueVine a great option for newer businesses with numerous invoices needing financing.
What BlueVine Is Missing
While BlueVine offers great funding options, you need to have B2B or B2G invoices to benefit from this service if you have bad credit, which is not necessary with the others on our list. The benefit, however, is that you can qualify for a significantly higher loan amount of up to $5 million. As an alternative, BlueVine also offers a line of credit and term loan, or you could consider working with Fundbox.
We considered BlueVine reviews by users from around the web. In so doing, we determined it generally has positive ratings. Positive BlueVine reviews came from customers who were impressed with its helpful customer support team. Critical BlueVine reviews came from businesses unhappy about being denied financing. Read more on our BlueVine reviews page.
National Funding: Alternative for Bad Credit Borrowers Who Accept Credit Cards
National Funding‘s merchant cash advance (MCA) working capital loan is a good solution for businesses with poor credit that accept credit cards and need financing up to $250,000. Compared to the other options we evaluated, an MCA is an expensive (30% to 150% APR) funding source and should only be a last resort.
National Funding Costs
National Funding merchant cash advances are designed for high-risk borrowers unable to get access to credit anywhere else. To get a rate for your business, you need to contact National Funding directly for a customized quote because it is not transparent about its rates. Our evaluation showed it is the most expensive option on the list, with a top range APR of 150%.
For a one-year loan term with National Funding, you can expect to pay between $3,000 and $15,000 in interest for a $10,000 loan, based on the APR range we calculated. This makes a merchant cash advance an expensive option, and it should only be considered after your business has exhausted all other funding sources.
National Funding Terms
With National Funding merchant cash advances, terms are customized based on the needs of each business. Your advances and ultimate repayment will be based on the level and type of credit card payments you accept. Most borrowers will be required to make daily payments, based on a percentage of their daily credit card settlement.
The speed of approval for National Funding is comparable to the other loans we evaluated, and the repayment terms are typical for a merchant cash advance. However, borrowers who can qualify for other options before trying National Funding should exhaust those options first.
National Funding Qualifications
Qualifying for National Funding is easier than most of the other lenders we checked, requiring no minimum credit score and one year of operations. According to an FDIC survey of major banks, 92% of traditional lenders consider your credit score as the most important factor for approval, which makes National Funding a great alternative. However, you need to have at least $3,000 per month in credit card sales for this to be an option.
The largest hurdle for many businesses will be its time in business requirement. However, for established businesses with poor credit, National Funding provides an opportunity to build a relationship and apply for its other products as your credit improves.
What National Funding Is Missing
A National Funding merchant cash advance provides a financing option for businesses with poor credit that have been operational for at least a year. This means it is only an option for established businesses. If you are a newer business with poor credit, take steps to improve your personal credit score.
National Funding Reviews
We determined that National Funding has a mix of positive and negative ratings. Customers who gave positive National Funding reviews said the application process was quick and easy. Customers who gave negative National Funding reviews complained about the interest rates and hidden charges. Read more on our National Funding reviews page.
Business owners with poor credit shouldn’t be discouraged if they are rejected for a traditional bank loan because there are many good options worth considering. Depending on what your personal and business situation is, you may find any of the options in this article a good fit to get financing quickly.
Our recommended bad credit business loan provider is Fundbox. It offers up to $100,000 of financing without a minimum credit requirement. Your loan eligibility will be based mostly on your recent business history. There’s also no minimum revenue requirement to qualify, and it will typically get you funded in as little as one day.