Small business loans can be instrumental in helping businesses reach new heights. Getting approved for them, however, can sometimes be challenging for borrowers with lower personal credit scores (think scores below 670).
Small Business Administration (SBA) microloans are ideal for those with bad credit as they often have less strict eligibility requirements than other government-backed loans and still offer lower interest rates. However, the loan application process can be lengthy and the maximum you can borrow is just $50,000. So, many small businesses with bad credit will need to turn to private lenders.
If your small business needs a boost but you have a low credit score, consider these business loans for bad credit. We evaluated each loan on a range of features, including minimum and maximum loan amounts, repayment periods, personal credit score needed, Better Business Bureau rating and business requirements to apply. (Read more about our methodology below.)
Best bad credit small business loans
Best for next-day funding: OnDeck
Who's this for? OnDeck boasts a speedy funding process that begins with an application that takes just 10 minutes to complete, according to the lender. Approved borrowers can receive funds as soon as 24 hours later.
Standout benefits: OnDeck's term loans have a minimum credit score requirement of 625, making it a more accessible option for those with lower credit scores. To qualify, borrowers must have been in business for at least one year, have at least $100,000 in annual revenue and have a business bank account, so this lender may not be the best option for newly launched businesses or those who need funding for a start-up. Additionally, OnDeck has disbursed over $15 billion to businesses in the U.S. and has an impressive A+ rating from the Better Business Bureau (BBB). Potential borrowers can check their eligibility without harming their credit score.
Potential for same-day funding for term loans up to $100,000
- Potential for same-day funding for term loans up to $100,000
- Low minimum credit score
- Fixed monthly payments
- Doesn't lend in Nevada, North Dakota or South Dakota
- Early payment fee if you don't qualify for prepayment benefit
Best for microloans: Kiva
Who's this for? Kiva is a crowdfunding platform that lets small business owners raise up to $15,000 from their network of lenders. Because of this funding limit, businesses with low start-up costs might find Kiva most beneficial. After you apply, you'll have 15 days to invite your friends and family to lend money to your business and then Kiva will open it up to their network of lenders to help you raise money. Kiva has helped borrowers raise over $1 billion so far, according to its website.
Standout benefits: This lender doesn't have a minimum credit score requirement, making it a more accessible option for those who may not qualify for loans with higher credit score requirements.
Loans are geared toward borrowers, especially business owners, who are unbanked and have trouble qualifying for financial products.
- 0% interest and no fees
- No minimum time in business or annual revenue required
- No credit score requirement
- Can reach community of 1.6 million Kiva lenders
- Low lending limit
- Personal guarantee required
- Borrowers need to crowdfund from their network
Best for borrowing higher amounts: National Funding
Who's this for? National Funding is ideal for borrowers with lower credit scores who need to borrow larger amounts. Eligible borrowers can apply for as much as $400,000 in funding, much more than the $250,000 maximum small business lenders commonly offer. When applying for a bad credit loan, this lender will consider factors such as the length of time in business and annual gross sales.
Standout benefits: National Funding offers three main funding solutions to small businesses: working capital loans, short-term business loans and equipment financing loans. It offers loans that service a variety of industries, including beauty and wellness, restaurants, agriculture businesses and more. This lender has provided over $4.5 billion in funding to businesses and has an A+ rating from the BBB.
National Funding
Types of loans
Working capital loans, short term loans, equipment financing loans
Better Business Bureau (BBB) rating
A+
Loan amounts
Up to $500,000
Terms
Up to 5 years, depending on the loan type
Minimum credit score needed
Not disclosed
Minimum requirements
Must be in operation for at least six months and have at least $250,000 in annual sales
See our methodology, terms apply.
Pros
- Offers a higher funding amount at $500,000
- No-cost application
- Application approval in as little as 24 hours
- Doesn't require collateral
- Offers an early payoff discount
Cons
- High annual sales requirement to qualify for the loan
Best for secured loan options: Greenbox Capital
Who's this for? Greenbox Capital allows borrowers to get approved for a $250,000 secured loan with collateral or a $500,000 business line of credit .
Standout benefits: This lender considers factors beyond your credit when evaluating your application, such as business revenue, cash flow, vendor payment history, years in business and public records. Greenbox Capital offers a range on small business funding options, including collateral loans, merchant cash advances and business lines of credit. It funds businesses in most industries, including some high-risk industries. It requires businesses to have been in operation for at least 5 months to receive funding, so Greenbox is not for start-ups.
Greenbox Capital
Types of loans
Term loan, business line of credit, invoice factoring, merchant cash advance
Better Business Bureau (BBB) rating
A+
Loan amounts
$3,000 to $500,000
Terms
Not disclosed
Minimum credit score needed
Not disclosed
Minimum requirements
Must be in operation for at least five months
Terms apply.
Pros
- Funding amounts between $3,000 and $500,000
- Borrowers could get funded in as little as one business day
- Applicants get connected with a Funding Advisor to walk through funding options
- Options available for borrowers with lower credit scores
Cons
- Repayment terms for collateral loans may err on the shorter side
Can you get a business loan with bad credit?
It's possible to get a small business loan even if you have bad credit, but you may need to provide collateral to secure the loan or agree to higher interest rates. Additionally, you'll need to consider lenders that specifically cater to applicants with bad credit, or those that focus on alternative factors for approval, such as transaction history and revenue rather than credit.
What disqualifies you from getting a business loan?
Several factors can be seen as "red flags" when applying for a business loan.
- Bad credit: A poor credit score, whether personal or business, or a large amount of existing debt is often viewed as a sign that you're a risky borrower.
- Insufficient revenue: Many lenders clearly state a minimum required revenue to qualify for the loan.
- Too new: Borrowers typically need to be in business for at least six months to be approved for financing.
FAQs
How can I get a small business loan?
To get a small business loan, figure out how much money you need to borrow and make a plan for how you'll use that funding. Then, look for a lender that can satisfy your desired loan amount. Make sure you meet the lender's eligibility criteria, then submit an application online (or in person if your lender has physical locations).
Is a small business loan secured or unsecured?
Small business loans can be either secured or unsecured, depending on the terms of your loan. Some lenders require that you secure the loan using collateral, while others don't. It's often easier for borrowers with low credit to qualify for a secured loan.
Is a small business loan a form of installment credit or revolving credit?
Small business loans are generally a type of installment credit, since you promise to repay the full amount in fixed increments over time.
How long does it take to get approved for a small business loan?
Small business loan approval times can vary by lender. Lenders often make an approval decision in just a few days, but keep in mind that a fast approval time can also be influenced by whether or not you submit all necessary documentation without any inaccuracies.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every small business loan list is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Our methodology
To determine which small business loans are best for borrowers with bad credit, CNBC Select analyzed a dozen U.S. loans offered by both online and brick-and-mortar lenders. We narrowed down our rankings by only considering traditional loans, including term loans, equipment loans, commercial real estate loans, microloans and franchise loans. (We excluded business lines of credit, invoice factoring/financing, and merchant cash advances.)
We compared each lender on a range of features, including:
- Minimum and maximum loan amounts
- Length of term
- Credit score needed
- Application requirements
- Streamlined application process
- Fund disbursement
- Customer support
- Better Business Bureau rating
- Customer reviews, when available
The rates and fee structures for small business loans are subject to change without notice, and they often fluctuate with the prime rate. However, once you accept your loan agreement, a fixed-rate APR will ensure that the interest rate and monthly payment remain consistent throughout the loan term. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness.
To take out a small business loan, lenders will conduct a hard credit inquiry and request a full application, which could require both personal and business proof of income, identity verification, proof of address and more. You'll likely also need to put up collateral, which can include business equipment, real estate or personal assets.
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