5 Best Business Loans for Bad Credit in 2023

Worried bad credit is going to keep you from getting a small-business loan? Well, don’t give up hope just yet. While you may not qualify for the best terms and the lowest rates, you can still get financing as a business owner with a less-than-perfect credit score.

We’ve found 10 lenders that accept lower credit scores (below 600) or don’t check credit at all. 

Our top pick for most business owners is Lendio, since it gives you the most loan choices and lets you compare offers. But we’ve found nine other great lenders too, offering everything from microloans to invoice financing to lines of credit. This way you can be sure to find the right financing for your cash flow needs.

Lenders don’t lend money to businesses out of the kindness of their hearts—they want to get paid back (and then some).

That’s why they look at your credit score. Lenders need to make sure you’re trustworthy (or creditworthy), and your credit score is one indicator they use. For example, if you have a habit of paying back what you owe, you’re likely to have a good credit score. But if you have a track record of missing payments or you’ve defaulted on loans, that history will be reflected in a bad credit score and credit report.

In other words, lenders use your personal credit score to figure out whether or not you’ll repay your loan—and whether or not they should lend to you in the first place.

Your credit score can affect both your chances of getting funded and the conditions of the funding you get.

Put simply, if you have a high credit score, you are more likely to get approved for loans. But if you have a low credit score, you are less likely to get approved.

Even if you do get approved, your credit score can affect funding conditions like your loan amount and interest rate. With a higher score, you’re more likely to qualify for higher loan amounts, lower interest rates, and more favorable repayment terms. But if you have a lower score, lenders might worry about your ability to repay a loan—which means they’ll give you a lower amount, higher rates, and shorter repayment terms.

So of course you want a higher credit score. But how do you get there?

To understand why we like Lendio so much for bad credit loans, you need to understand what Lendio is and what it isn’t.

Lendio isn’t a direct lender—it’s a lending marketplace. So when you apply to Lendio, they'll use your information to hook you up with the best loans you can qualify for (but it doesn’t extend those loans itself). That means you can compare offers and make sure you’re getting the best loans with the best rates for your situation.

And good news: Lendio works with some of the lenders on this list (like Forward Financing), so you won’t miss out on your chance to get a loan from them—you’ll just have an easier time comparing your options. 

With one application going to many lenders, we think Lendio is the obvious first stop for most business owners with bad credit.

Kiva works really differently than most other lenders. So differently, in fact, that it doesn’t charge any interest.

That’s just the tip of the Kiva iceberg though. Kiva doesn’t care how long you’ve been in business, how much revenue you earn, or your credit score. They accept all businesses and don't charge for borrowing. Amazing, right?

So why isn’t Kiva the top lender on our list? Well, Kiva loans max out at $15,000—too low for many working capital needs. Plus, Kiva’s unique funding model takes at least one month to get you money, which can be too long of a wait for some businesses. 

But if you can spare the time, Kiva’s no-interest microloans are worth waiting for.

If you want low-interest rates but can’t make a Kiva loan work, we suggest looking at Accion Opportunity Fund instead.

Accion Opportunity Fund has very competitive starting rates on its business loans―just 5.99%. That’s not quite bank loan low, but it’s very low for an online lender. And like other lenders on this list, Accion Opportunity Fund doesn’t have a hard credit requirement. So you can qualify for its loans with less-than-perfect credit.

Now, to be clear, bad credit probably won’t earn you a 5.99% interest rate. But working with a lender that has low starting rates is still likely to get you a better rate than working with a lender that has high starting rates.

Put simply, Accion Opportunity Fund gives you the best shot at competitive interest rates despite a lower credit score.

Do you use Square for credit card processing? Then you should check to see if you’re eligible for a loan through Square.

Square offers its card processing customers a chance at a working capital loan. And because your eligibility comes from your Square processing habits, Square doesn’t care about your credit score. And while it does have some revenue and time-in-business requirements, Square’s borrower requirements look pretty accessible compared to many lenders.

Unfortunately, Square doesn’t let you manually apply for a loan. If they think you qualify, they'll simply offer you one. So Square loans aren’t great for urgent funding needs (assuming you don’t already have an offer). And yeah, they’re just for Square users.

If you do use Square, though, its loans might offer the easiest way to get a business loan with bad credit.

We don’t love merchant cash advances. But if you’re going to get one, Lendr would be the best pick.

For starters, Lendr has all the advantages you’d expect from any merchant advance company: They don't care much about your credit score and you can get funded very quickly. But they also have a few other advantages, like great customer reviews, decent loan sizes, and more than one type of financing product.

Yes, they still come with the typical merchant cash advance downsides―like large fees that get described in a somewhat misleading way. In other words, you’ll want to carefully read the fine print and make sure you understand all your terms.

But thanks to those upsides we mentioned, Lendr is our favorite source for merchant cash advances.

Haven’t seen the right lender for you just yet? We’ve found some other companies that might work better with your credit score and situation.

Enter your loan needs and qualifications to get matched with a list of lenders best suited to you. Then, sort by the financing factor that you find most important. (Note: not all lenders allow personal loans for business use.)

If you make at least $15,000 a year in PayPal sales, you might qualify for a PayPal Working Capital loan—no credit check needed. These loans work a lot like merchant cash advances, meaning PayPal will take a percentage of your sales to repay the loan.

The rates can get high, but it’s a convenient way to get financing without worrying about your credit.

Stripe Capital operates just like PayPal Working Capital and Square Capital. If you make enough sales via Stripe, you can get approved for a Stripe Capital loan without a credit check.

Stripe is pretty cagey about the costs of its loans, but you should expect high fees (as you would with any merchant cash advance).

Payability works specifically with e-commerce sellers (on Amazon, Walmart, ebay, and more sites) and it offers fast working capital. Payability only cares about your e-commerce revenue―not your credit score.

Of course, as with any cash advance company, Payability costs a lot (though you can reduce your fees by repaying your advance quickly). So be sure to calculate carefully before borrowing.

Want to go with a lender that customers love? Forward Financing has just about the best customer reviews we’ve seen for a lending company (it maintains a 4.9 out of 5 on Trustpilot¹), and accepts credit scores as low as 500.

Unfortunately, they just offer merchant cash advances, so you have to deal with high costs and confusing repayment terms. But given how much users love it, Forward Financing must be doing something right.

Like Lendio, National Business Capital is a lending marketplace. That means you apply for lots of lenders with just one application. So if Lendio doesn’t strike your fancy, National Business Capital offers a good alternative.

Be sure to note, though, that National Business Capital has higher revenue requirements for would-be borrowers—and they don't list their rates or fees. That’s why we suggest looking at Lendio first and using National Business Capital as a backup.

Do you want better terms on your loans? Do you need access to a wider variety of lending options? Well, it all comes down to your credit score.

You may actually have two different credit scores — a personal one and a business credit score. You’ll only have a business credit score if your company has been set up as an official entity. As for personal credit, chances are you already have a score. 

We’ll be talking specifically about how to improve your business credit score, but some of the same rules apply to personal credit.

Improving your business credit isn’t easy or quick but you can put your credit score on the right track with these steps.

1. Set up your business. You’ll need an official name, address, tax ID and a proper business structure — LLC or S corp, for example.
2. Check your credit status. You’ll want to see if Experian, Equifax and Dun & Bradstreet have opened up a file for your business. The more good credit scores you have, the easier it will be to find a loan.
3. Make payments on time. Just like with your personal credit, never miss a payment. This will help your credit score improve steadily over time.
4. Keep your credit utilization low. If a business credit card has a credit limit of $5,000, don’t carry a balance over $1,500. That’s utilizing 30% of your available credit, which experts recommend staying at or below. The lower your credit utilization ratio, the better.
5. Watch your credit report for mistakes. Sometimes credit bureaus get incorrect information. If you see something in your credit report that doesn’t look right, reach out to the agency and dispute it. 
6. Set up alerts. Some credit card issuers offer financial alerts like telling you when you’ve exceeded 20% of your credit limit.

Keep unused credit lines open. Simply having credit available to you will boost your score by increasing the age of your credit and lowering your utilization. That’s why you should keep cards open, even ones you’re not using. If the card has yearly fees, however, you may have to consider the cost to benefit ratio of keeping it open.

The flexibility of a long-term business loan is a great selling point, but you may not actually need one to get the job done. There are other options depending on your business and the type of financing you need.

Equipment loans allow you to use the equipment itself as collateral to secure the loan. Secured loans are more desirable because they often have lower interest rates. The main drawback to an equipment loan is that you’re limited to buying equipment.

Another alternative is a personal loan. These loans are best for newer small businesses that haven’t had time to establish business credit. Personal loans are authorized based on your personal credit score and secured with personal assets rather than business assets. Personal loans usually have higher interest rates — roughly 6% to 10% — than business loans though.

If nothing else is working, you can try out invoice financing. This form of financing is a company giving you an advance on your unpaid invoices. The lender will offer this service at a predetermined rate, which is usually fairly high, akin to interest rates for credit cards.

Finally, we get to the merchant cash advance. The way a merchant cash advance works is the lender gives you a lump sum payment upfront in exchange for a cut of your future credit card sales. 

You’re essentially giving them the right to garnish your future sales. This form of financing almost always comes with a very high rate. You may pay $1,200 in fees to access $10,000.

As we said earlier, we found that Lendio has the best options for business owners with bad credit scores since it gives you plenty of loan options and lets you compare loan offers. 

But Lendio is just one option. If you don’t want to pay any interest, you can go with Kiva. Or if you simply want very competitive rates, there’s Accion Opportunity Fund. Square users will likely want to stick to Square Loans. And for business owners that want a merchant cash advance, we suggest going with Lendr.

No matter which of the lenders you choose, your less-than-perfect credit doesn’t have to be a deal-breaker when it comes to funding your business.

Bad-credit loans often come with higher rates—so make sure you understand what you’ll be paying by checking out our guide to APR.

We dove into more than 50 business lenders’ websites to figure out which ones offer loans to business owners with bad personal credit. Once we’d found all the places offering bad credit loans, we scored them on factors like loan costs, funding times, and customer reviews. We used those scores to determine which lenders made the cut―and then to rank and review them.

According to the official FICO definition, a bad credit score falls between 300 and 600. (Of course, people sometimes say they have “bad credit” when they mean they have a lower credit score than they’d like.)

Here’s the full breakdown of FICO credit ratings:

There is no minimum credit score requirement to get a business loan, but you’ll have a much easier time qualifying if you have a score over 600 (and preferably higher).

That being said, individual lenders often do require a minimum credit score from borrowers. Most banks require at least a 680 to qualify for a traditional loan. Likewise, the minimum score to qualify for an SBA loan is 650.

So if you have a 550 personal credit score, you will have limited choices. But between lenders with low credit requirements and lenders that don’t check credit, you do have some potential options.

If you have bad credit, business financing options like equipment financing, invoice financing, and merchant cash advances will probably be your best bet.

Because these loans require collateral (whether that’s the equipment you purchase, your invoices, or a percentage of your credit card sales), they’re often easier to qualify for than traditional term loans.

You may also qualify for some short-term loans, like the ones offered by Square Loans, Stripe Capital, and PayPal Working Capital.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.