Bad Credit? Where to Find Business Loans

Bad credit is a red flag for lenders.

A weak personal credit score indicates you’ve mismanaged your personal finances in the past. Bad credit (a score that ranges from 300 to 629) is one reason business loan applications get rejected — and the approval rate of business loans from big banks was just 22.9% as of December 2015, according to a Biz2Credit report. It’s already tough to get a traditional business loan — bad credit makes it that much tougher.

But it is still possible to get a business loan with bad credit. Below we have highlighted some of your best options, depending on your credit score and your business needs.

If your credit score is at least 500: OnDeck

OnDeck is an alternative lender offering both term loans and lines of credit. A term loan is an option for businesses that need quick cash to expand, whether it’s to purchase equipment or make renovations, while a line of credit is best for managing cash flow and working capital.

To be eligible for OnDeck’s term loan, you need a personal credit score of 500 or higher. See if you qualify in the box below.

Once you complete an application at OnDeck’s website, you’ll get a decision within minutes and funding as soon as the next day. And here’s a credit-building bonus: OnDeck reports your payment activity to the three credit bureaus, so paying off the loan on time can help you build your credit score.

Do you qualify? Loan amount: $5,000 to $500,000 APR: 8.9% to 98.4% Loan term: Repaid daily or weekly for 3 to 36 months Approval time: Decision within minutes; funding in as little as 24 hours Note: OnDeck also offers lines of credit of up to $100,000 Read our OnDeck review.

Learn More Apply on OnDeck’s secure site

 

If you have at least $60,000 in annual revenue: Kabbage

Kabbage does not require a minimum credit score to qualify. The lender is a good option for business owners who need money fast for short-term working capital (such as meeting payroll and buying inventory), as the company provides a line of credit that you can borrow from and repay on an as-needed basis.

Although Kabbage does check your credit history, the company does not use your personal credit score as the primary criterion in its underwriting. It takes into account other data such as accounting, banking and e-commerce records.

To qualify, you need to have minimum annual revenue of $60,000, have been in business at least one year, and have a business checking or PayPal account.

The company’s online application should take just minutes to complete, and if approved, you can get funded within a few days. However, you’ll pay for this speed and convenience, as the cost of Kabbage lines of credit range from 20% to 113% APR.

Do you qualify? Loan amount: $2,000 to $100,000 APR: 20% to 113% Loan term: 6 months Approval time: A few minutes to several days Read our Kabbage review.

Learn More Apply on Kabbage’s secure site

If your credit score is at least 600: Dealstruck

Dealstruck is a good option for businesses that need to buy inventory, as the company’s inventory line of credit lets you finance 100% of your inventory purchases up to $500,000.

On average, Dealstruck borrowers have FICO scores of 660 to 700, but CEO Ethan Senturia says the lender has accepted scores in the 500 range.

Do you qualify? Loan amount: Up to $500,000 APR: 11% to 22% + prime rate Loan term: 6 months per draw Approval time: Pre-qualification in minutes, offer letter in 2 to 3 days, average of 10 days to funding Note: Dealstruck also offers term loans of up to $250,000. Read our Dealstruck review and learn more about the application process.

Learn More Apply on Dealstruck’s secure site

If you have unpaid invoices and a personal credit score of at least 530: BlueVine

If you have bad credit and lack collateral but you have unpaid invoices, BlueVine offers options for invoice financing. The lender provides an advance based on the value of your invoices, and approval is based more on the strength of your cash flow and the financial strength of your debtors than your personal credit score.

Still, for BlueVine, you will need a personal credit score of 530 or higher. See if you qualify in the box below.

Do you qualify? Loan amount: $5,000 to $250,000 APR: 23% to 61% Loan term: 40 to 90 days Approval time: 1 hour to 1 day Read our BlueVine review.

Get Started Apply on BlueVine’s secure site

 

If you have unpaid invoices and want to avoid a credit check: Fundbox

Fundbox is another good choice for invoice financing. Like BlueVine, it advances you cash based on invoices and emphasizes your clients’ ability to pay you rather than your credit score.

To qualify for Fundbox, you’ll need to use online accounting or bookkeeping software such as QuickBooks, Xero or Wave and have a minimum of six months’ activity in one of these software applications. The company does not require a minimum personal credit score or minimum annual revenue.

Do you qualify? Loan amount: $500 to $30,000 APR: 44% to 66% Loan term: Equal repayments over 12 weeks Approval time: Instant approval with funding in 1 to 3 business days Read our Fundbox review.

Learn More Apply on Fundbox’s secure site

 

Bad-credit small-business loans: The bottom line

Bad personal credit is often an obstacle in getting business loans from a traditional bank. Alternative lenders provide options as they place more of an emphasis on the strength and operating history of your business, and worry less about your credit. As with any small-business loan, it’s important to carefully compare all of your options, weighing each loan’s terms and APR.

Find and compare the best small-business loans

If none of these works for you, or if you’d like to compare your loan options, NerdWallet has curated a list of small-business loans best for business owners. All of our recommendations are based on the lender’s market scope and track record and on business owners’ needs, as well as rates and other factors, so you can make the right financing decision.

 

Compare business loans

 

Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.

This post was originally published on Nov. 13, 2015

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Image via iStock.

OnDeck

Before you apply for an OnDeck loan or line of credit, make sure you meet the lender’s minimum qualifications.

• Have you been in business for at least a year?
• Is your personal score 500 or higher?
  You or at least one business owner has to have a personal credit score of 500 or higher for term loans. For its line of credit, the lender requires a credit score of at least 600 from a majority owner. Nerd note: A vast majority of OnDeck borrowers in 2015 had a personal credit score of 600 or higher, according to the company.
• Does your business generate at least $100,000 in annual revenue?
  OnDeck requires an annual revenue of $100,000 or more for term loans, and $200,000 or more for lines of credit.
• Do you have zero major credit blemishes?
  You can’t have had a personal bankruptcy in the last two years.

If you answered “no” to any of these questions, check out the other bad credit loan choices. Credit cards are another option for a revolving line of credit. Read about the pros and cons of business credit cards.

Kabbage

Before you apply for a Kabbage line of credit, find out whether you meet the lender’s minimum qualifications.

• Note: Kabbage does not have a minimum personal credit score requirement.
• Have you been in business for at least a year?
• Does your business generate at least $60,000 in annual revenue?
• Do you have a business checking or PayPal account?

If you answered “no” to any of these questions, check out the other bad credit loan choices. Credit cards are another option for a revolving line of credit. Read about the pros and cons of business credit cards.

Dealstruck

Before you apply for a Dealstruck loan, find out whether you meet the lender’s minimum qualifications.

• Have you been in business for at least a year? 
  The lender’s borrowers average more than five years in business, but after one year, you are in the running.
• Are you profitable?
• Do you have a personal credit score of 600 or higher?
  The typical Dealstruck borrower skews a little higher, with an average credit score of 660 to 700.
• Does your business generate at least $150,000 in annual revenue?
  Keep in mind average yearly revenue for the lender’s borrowers is $1 million to $2 million. But with $150,000, you are eligible.

If you answered “no” to any of these questions, check out the other bad credit loan choices. Credit cards are another option for a revolving line of credit. Read about the pros and cons of business credit cards.

BlueVine

Before you apply for a BlueVine loan, find out whether you meet the lender’s minimum qualifications.

• Do you have unpaid invoices?
• Do you have a personal credit score of at least 530?
• Does your business generate at least $70,000 in annual revenue?
• Do you have zero major credit blemishes?
  BlueVine requires that you’ve had no personal bankruptcy in the last year.

If you answered “no” to any of these questions, check out the other bad credit loan choices. Credit cards are another option for a revolving line of credit. Read about the pros and cons of business credit cards.

 

Fundbox

Before you apply for a Fundbox loan, find out whether you meet the lender’s minimum qualifications.

• Note: Fundbox does not have a minimum personal credit score requirement.
• Do you have unpaid invoices?
• Do you use online accounting or bookkeeping software, such as QuickBooks, Xero, Harvest or Freshbooks?
• Do you have at least six months of activity in one of the software applications?
• Do you have zero major credit blemishes?
  Fundbox requires that you’ve had no personal bankruptcy in the last year.

If you answered “no” to any of these questions, check out the other bad credit loan choices. Credit cards are another option for a revolving line of credit. Read about the pros and cons of business credit cards.