Financing is a major pain point for small-business owners, and if you’re a woman, your choices might be even more limited. Women own 30% of U.S. small businesses, but they receive only $1 of every $23 of small-business financing, according to the Senate Committee on Small Business and Entrepreneurship.
There are small-business loans specifically to help women-led ventures flourish. But business owners who have had a few wrong turns in their credit history often struggle to access the capital they need.
Alternative lenders can help people with poor credit establish and grow their business. These lenders generally have fast application processes and fund borrowers quickly — but at a cost: annual percentage rates vary widely, and sometimes reach upward of 100%.
Whether your business is just getting started or ramping up for its busy season, here are six options that can help with your financing needs, even if you have a less-than-stellar credit score.
FOR WOMEN:
With a business 1+ years old with $25K+ in annual revenue
With bad credit but at least $100,000 in revenue
With bad credit who need quick cash
With a business that has outstanding invoices
For women starting a business
Small-business lending has yet to bounce back to pre-recession levels, making access to startup capital from banks scarce at best. Because of this, if you have a poor credit history, funding your venture with a credit card might be your best option.
But shop smart for the best credit cards:
Compare all business credit cards
For women-owned businesses 1 year old
When you’re trying to become a contender in your industry but still finding your footing, peer-to-peer lender StreetShares may be an option. The company uses “affinity-based lending” to connect business owners with investors that have similar characteristics. For women, that means being connected with female backers, a method the company says helps to generate lower interest rates for borrowers.
You must have been in business at least one year and have an annual revenue of $25,000 to qualify for term loans with APRs from 8% to 40%. Lending amounts are on the low end, however. Although the company offers loans up to $100,000, you can only borrow the equivalent of 20% of your annual revenue. The small amounts make this option more appropriate for a new business looking to establish itself than for an older company looking to expand.
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|---|---|---|
| Personal credit score | 600 | 705 |
| Time in business | 1 year* | 4 1/2 years |
| Annual revenue | $25,000 | $700,000 to $800,000 |
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| *If you make more than $100,000 in annual revenue, the required time in business drops to six months. | ||
STREETSHARES TERMS
APR: 8% to 40%
Loan amount: $2,000 to $100,000
Loan term: 3 to 36 months
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For owners with poor credit and at least $100,000 in revenue
When your business is growing, you might want capital to purchase more inventory, make renovations or support increased labor costs. OnDeck offers term loans and a business line of credit that can help cover those expenses. And the lender’s looser requirements make a bad credit score less likely to affect your chances of qualifying.
An added bonus? The application process is quick and simple, and funds hit your account in as little as 24 hours. OnDeck requires at least one owner with a personal credit score of 500 or higher.
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|---|---|---|
| Personal credit score | At least one owner with 500 or higher for term loans, and a majority owner with 600 or higher for lines of credit | Over 600 |
| Time in business | At least 12 months | Median of 7 years |
| Annual revenue | $100,000 or more in the last year for term loans and $200,000 or more for lines of credit | Median of $600,000 |
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ONDECK’S TERMS
APR: 9% to 98% for term loans; 14% to 36% for lines of credit
Loan amount: $5,000 to $500,000 for term loans; lines of credit up to $100,000
Loan term: 3 to 36 months for term loans; 6 months for lines of credit
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For quick working capital
When your computer crashes or the holiday season sparks an uptick in inventory needs, a cash loan from Kabbage is one option. The lender considers not only your credit score, but also accounting, banking and e-commerce data when reviewing your application, making it a good alternative for business owners with poor credit. However, Kabbage loans also have high APRs: 32% to 108%.
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qualifications |
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|---|---|---|
| Personal credit score | No minimum | N/A |
| Time in business | 1 year | About 2 to 5 years |
| Annual revenue | $60,000 | About $100,000 to $10 million |
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KABBAGE’S TERMS
APR: 32% to 108%
Loan amount: $2,000 to $100,000
Loan term: 6 months
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For businesses with outstanding invoices
When your vendors don’t pay on time, you might need funds to cover the shortfall. If you need less than $30,000, Fundbox will advance 100% of invoices that are 60 to 90 days outstanding, and you can pay it back in 12 weekly installments. The lender charges interest rates of 44% to 66%, depending on the amount of the advance.
Fundbox does not require a minimum credit score; instead, you need six months of activity in an online accounting or bookkeeping software, such as QuickBooks.
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Minimum qualifications | Typical borrower profile |
|---|---|---|
| Personal credit score | None required | N/A |
| Time in business | No minimum — six months of activity in an online accounting or bookkeeping software required | N/A |
| Annual revenue | None required | N/A |
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FUNDBOX’S TERMS
APR: 44% to 64%
Loan amount: $500 to $30,000
Length of term: 12 weeks
If you need more cash, you can apply for an asset-based revolving line of credit of up to $500,000 from Dealstruck. The lender will cover 85% of invoices and leave you with some wiggle room to cover daily expenses. You’ll pay an APR of 11% to 22% plus the prime rate, and have six months to pay back the funds.
Dealstruck requires a minimum personal credit score of 600. The application process can take from two days to two weeks.
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qualifications |
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|---|---|---|
| Personal credit score | 600 | 660 to 700 |
| Time in business | 1 year | About 5 years |
| Annual revenue | $150,000 | About $1 million to $2 million |
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DEALSTRUCK’S TERMS
APR: 11% to 28%
Loan amount: 100% of inventory purchases up to $500,000*
Length of term: 6 months per draw for inventory line of credit*
*Terms differ for Dealstruck’s asset-based lines of credit and term loans
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Find and compare the best small-business loans
If you’re still on the hunt for small-business loan options, NerdWallet has curated a list of loans to help meet business owners’ needs. We’ve gauged them on trustworthiness, market scope and user experience, and sorted them into categories based on revenue and the length of time you’ve been in business.
Compare business loansJackie Zimmermann is a staff writer at NerdWallet, a personal finance website. Email: jzimmermann@nerdwallet.com. Twitter: @jackie_zm
To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans page. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
This article has been updated. It was originally published Dec. 4, 2015.
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