Exploring Small Business Financing with Poor Credit History

Securing a loan from a bank or credit union can be quite challenging if your credit score is less than stellar. Fortunately, there are alternative avenues to explore, such as online and nonprofit lenders, which extend their services to individuals with personal credit scores that may plummet as low as 500.

It’s important to note that the interest rates associated with these financial products often tend to be higher when compared to the rates for traditional small-business loans. Therefore, it is advisable to engage in diligent comparison shopping to procure the most favorable terms. This ensures that the ensuing repayments align with your business’s financial capabilities and remain manageable.

Below, we present our curated selection of the finest business loans tailored for individuals with less-than-ideal credit scores, typically ranging from 300 to 629. In addition to this, we also provide valuable insights into the criteria and steps necessary to qualify for such financial assistance.

Understanding Bad Credit Scores

Obtaining financing for your entrepreneurial pursuits can pose a substantial obstacle if you find yourself burdened with a less-than-stellar credit profile. This setback revolves around a deficient personal FICO Score, one that languishes below the 670 mark, signifying a track record replete with financial mismanagement or economic setbacks.

When submitting your application for a business loan, lenders routinely scrutinize both your individual and business credit scores. Yet, should your business still be in its infancy or lack a well-established credit history, the lender might place greater emphasis on your personal credit track record as the yardstick for eligibility.

For entrepreneurs grappling with tarnished credit histories, bad credit business loans emerge as a vital lifeline. These specialized financial products typically mandate a credit score that hovers at 500 or higher.

However, there’s a caveat that accompanies these loans, and it’s a substantial one – the interest rates attached to them tend to soar. Before committing to any such offer, it becomes imperative to conduct a meticulous evaluation of the proposed interest rate, ensuring that it dovetails seamlessly with your financial capacity.

Here are some valuable tips to navigate the world of bad credit business loans:

  • Improve Your Personal Credit: Since personal credit can heavily influence eligibility, work on improving your FICO Score by paying bills on time, reducing outstanding debts, and resolving any credit report errors;
  • Explore Other Financing Options: Don’t limit yourself to bad credit business loans. Investigate alternative funding sources like crowdfunding, angel investors, or business grants;
  • Create a Solid Business Plan: A well-structured business plan can boost your chances of approval and demonstrate your commitment to success.

Types of Bad Credit Business Loans

Bad credit business loans come in various forms, tailored to different business needs and circumstances. Understanding these options can help you make informed choices when seeking financing:

Term Loans

  • Lump sum financing for diverse business needs;
  • Online lenders offer more lenient requirements and quicker funding processes.

Secured Loans

  • Business owners provide assets as collateral;
  • Collateral may help secure a loan, even with poor credit.

Line of Credit

  • Functions like a business credit card, offering on-demand access to funds;
  • Pay interest only on the amount used.

Working Capital Loans

  • Support daily operations and short-term expenses;
  • Lower credit requirements make them suitable for bad-credit applicants.

Equipment Financing

  • Ideal for purchasing or replacing costly equipment;
  • Equipment acts as collateral, making it accessible to businesses with bad credit, including startups.

Invoice Factoring

  • Convert unpaid invoices into immediate cash by selling them to a factoring company;
  • Lower risk for lenders as invoices secure the loan.

Merchant Cash Advances

  • Suitable for businesses with bad credit;
  • Repayment is automatic, deducted from credit and debit card sales.

Diving Deep into Premier Bad Credit Business Loans

talking about business loan credits

Navigating bad credit business loans requires precision and clarity. For entrepreneurs with less-than-ideal credit, securing financing is challenging but not impossible. Premier bad credit business loans cater to this market with pragmatism, focusing on performance metrics beyond credit scores.

Lenders in this niche scrutinize cash flows, business plans, and operational history. Although these loans come with higher interest rates and rigid terms to offset credit risk, they are pivotal for businesses needing capital to sustain operations or expand.

Backd: A Stellar Choice for Short-term Loans

  • Origin: An innovative online lending platform, Backd provides a suite of financial solutions to aid businesses in their financial needs;
  • Offerings: Its offerings encompass business lines of credit, working capital loans, and the distinctive “BackdPay” buy now, pay later option;
  • Quick Process: The online application procedure with Backd is swift and user-friendly. Businesses can expect pre-approval decisions in just minutes, with funds usually transferred within a day;
  • Loan Amounts: An impressive feature is its generous lending amounts: up to $750,000 for lines of credit and a whopping $2 million for working capital loans.

Distinct Features of Backd’s Short-term Loans

  • Flexibility: Despite having shorter repayment periods relative to some competitors, Backd incorporates versatile repayment aspects into its loans.
  • Working Capital Loan: Terms can stretch to 16 months, and businesses can opt for daily, weekly, or semi-monthly payment schedules;
  • Business Line of Credit: Enjoy unlimited terms and choose either a 6-month or 12-month repayment plan;
  • BackdPay Option: This buy now, pay later solution permits businesses to make purchases even when short on cash and then spread the payments over a year.

Ideal Users

Businesses in need of rapid, short-duration funding will find Backd particularly accommodating. The variety of repayment schemes tailors to diverse needs based on the selected loan type.

Fora Financial: The Go-to for Repayment Perks

  • Background: Founded in 2008, Fora Financial has built its reputation as a direct lender, specializing in short-term loans and revenue-based advances;
  • Loan Capabilities: Their loan provisions range from $5,000 to a generous $1.4 million, positioning them favorably among online lenders;
  • Revenue Advances: A distinctive feature is its revenue advances. By pegging loans to future earnings, it potentially facilitates easier qualification for businesses.

Why Fora Financial Excels in Repayment Options

  • Duration: Their loans come with a maximum tenure of 16 months. While this might seem short, Fora Financial compensates with other perks;
  • Prepayment Benefits: If a business opts to clear its dues early, Fora Financial rewards them with a discount. This not only reduces the overall amount due but also the unique “factor rate fee”—an upfront fee that replaces the traditional interest rate;
  • Refinancing Opportunity: After repaying 60% of the initial loan, businesses have the option to seek additional funding.

Who Stands to Benefit

Fora Financial is a preferred choice for enterprises eager to settle their loans ahead of schedule. Their online qualification process is streamlined and accommodative, even catering to those with less-than-perfect credit. They reportedly accept credit scores as low as 500 for their short-term loans and 600 for revenue advances. However, businesses should ensure they meet other criteria, notably, an annual revenue benchmark of at least $120,000.

Credibly: A Prime Choice for Swift Prequalification

Credibly stands out due to its dual approach, encompassing both partner lenders and direct lending. Catering primarily to small and medium-sized businesses, Credibly provides a myriad of loan options that can effectively meet diverse financial requirements. Some notable options include:

  1. Working capital loans;
  2. Merchant cash advances;
  3. Equipment financing;
  4. Invoice factoring.

What Sets Credibly Apart for Speedy Prequalification?

  • Accessibility: Credibly is known to be more accommodating than many of its competitors. Some of its loans even cater to individuals with personal credit scores dipping to 550;
  • Prequalification Process: Prospective borrowers can breathe easy, as prequalifying with Credibly doesn’t affect their credit score. Plus, upon approval, the funds can be in the account in a mere 24 hours.
woman with colleagues at the office consulting a client by the phone

Credibly’s Ideal Clientele

While Credibly’s lenient eligibility criteria are commendable, those with a personal credit score of 675, an annual turnover of $540,000, and a business lifespan of three years stand a better chance of approval. Some sectors that frequently benefit from Credibly’s offerings are:

  1. Restaurants;
  2. Contractors;
  3. Electrical services;
  4. Repair centers;
  5. Health practitioners’ offices or clinics.

Triton Capital: The Go-to for Attractive Payment Plans

Established in 2008, Triton Capital has been serving businesses across all the U.S. states with a variety of loan options. Their services include:

  • Working capital;
  • Equipment financing;
  • SBA loans.

Triton Capital takes pride in its efficient approval process, with some loans getting a nod within mere hours. Once approved, businesses can expect the funds in their account in just one to two working days

Why Triton Capital Excels in Offering Low Payments

  • Lowest Payment Guarantee: Triton Capital assures business owners of the most competitive payment plans. Should you find a lower payment from another non-bank finance company, they pledge to compensate with $250;
  • Flexible Payment Terms: Triton Capital stands out by providing multiple payment schedules. For instance, with their equipment financing loan, businesses can opt for monthly, quarterly, annual, semi-annual, or even seasonal payment options.

Triton Capital’s Target Audience

Triton Capital primarily serves well-established businesses seeking financial assistance ranging from $10,000 to $500,000. However, for approval, businesses should have at least two years of operational experience and a consistent revenue stream of a minimum of $350,000.

Imperial Advance: A Top Contender for Alternative Financing Solutions

Imperial Advance stands as a direct lending pioneer, boasting a robust online marketplace that links businesses to a pool of over 40 lenders. The platform provides a vast range of both traditional and unconventional business financing alternatives. Among these are:

  • Term loans: Set payment schedules and definitive end dates;
  • Asset-based loans: Use business assets as collateral for funding;
  • Accounts receivable financing: Turn unpaid invoices into immediate cash;
  • Furthermore, if you’re an existing customer who meets the criteria, you have the added advantage of accessing a business line of credit.

Why Choose Imperial Advance for Alternative Financing?

  • Customized Matching: Imperial Advance prioritizes connecting businesses with the lender and loan structure most aligned with their unique risk profile;
  • Flexibility with Credit: The platform celebrates its inclusive approach, emphasizing its ability to work with varying credit histories. This includes accepting credit scores as modest as 500 – a mark below most online lending standards;
  • Swift Funding: Timely access to funds is crucial. With Imperial Advance, businesses might receive their loan within a mere 48-hour window. However, traditional loan products might necessitate a waiting period of up to five days.

Ideal Candidates for Imperial Advance

  • Businesses grappling with poor credit, particularly those finding it challenging to qualify for mainstream loan products;
  • Entrepreneurs valuing swift funding procedures and a simplified, single-page digital application experience.

Fundbox: Your Go-to Solution for Lines of Credit

Fundbox has carved out its niche as an online lender specializing in furnishing businesses with working capital solutions through lines of credit. By centering its operations around this specific loan type, Fundbox optimizes the lending experience from application to repayment. Its digital application process is notably swift, with potential for approval in under three minutes and subsequent funding available the following day.


What Sets Fundbox Apart for Lines of Credit?

  • Varied Credit Limits: Businesses can secure credit lines starting as low as $1,000, scaling up to a substantial $150,000;
  • No Early Repayment Penalties: Fundbox champions financial prudence. Businesses settling their loans ahead of schedule won’t face any early repayment fees. Moreover, early repayment offers an avenue to sidestep additional weekly charges;
  • Effortless Access to Funds: Through an intuitive online dashboard and mobile application synced to your business bank account, accessing funds is a breeze;
  • Note of Caution: Although Fundbox’s maximum credit limit might appear generous, it falls short when juxtaposed with other platforms offering credit lines that surge up to $250,000.

Who Stands to Benefit Most from Fundbox?

  • Borrowers with average credit ratings, who have an immediate financing need and the capability to settle their loans promptly, will likely derive the most value;
  • Startups are in luck! Fundbox extends its services to emerging businesses. The prerequisites? A personal credit score of at least 600 and a business operation period of a minimum of six months;
  • However, it’s essential to be mindful of the lender’s amortized weekly fees. Over time, these could culminate in more substantial borrowing expenses in comparison to other credit line providers.

Bank of America: A Top Choice for Secured Credit Enhancement

One of the giants in the banking world, Bank of America boasts a vast network, with around 4,000 branches scattered throughout the U.S. While they have a broad range of loan offerings, not all are suited for individuals with subpar credit scores.

However, a standout feature of their services is the cash-secured credit line. This unique facility is designed to evolve into an unsecured credit line, assisting businesses in their growth phase and credit development journey.

Key Features

  • Accessible to New Ventures: While many traditional banking institutions often sideline businesses younger than two years, Bank of America’s cash-secured line of credit is available with a mere deposit of $1,000;
  • Promotion of Positive Credit Behavior: Bank of America actively promotes responsible credit management by offering credit limits ranging from $1,000 to $50,000. This empowers businesses to effectively manage their finances and cultivates a habit of making timely repayments;
  • Pathway to Unsecured Credit: Following a consistent 12-month track record of financial responsibility, the bank initiates a comprehensive evaluation to assess eligibility for transitioning to an unsecured credit line.

Ideal Candidates

Bank of America predominantly caters to small enterprises with a minimum annual revenue threshold of $50,000 and a business history spanning at least six months. This financial solution proves invaluable for businesses not currently in urgent need of financing, but rather, dedicated to bolstering their credit profiles.

By dedicating time to building their creditworthiness, businesses substantially improve their prospects of accessing more cost-effective loan options in the future.

Kiva: The Premier Platform for Microloans

Kiva stands out as a non-profit organization dedicated to supporting global entrepreneurs by extending microloans. It innovatively merges the principles of crowdfunding with the peer-to-peer lending model.

Prospective borrowers present their financing needs, rally support through personal connections, and then introduce the loan for contributions from individual patrons.

Key Features

  • No Interest Burden: Kiva facilitates U.S. based microloans ranging from $1,000 to $15,000 without imposing any interest, offering an economical financing route, especially for cash-strapped startups;
  • Inclusive Eligibility: As Kiva functions more as a platform than a traditional lender, it is more accepting, even welcoming startups and borrowers with negligible or negative credit histories;
  • Short-Term Commitment: The repayment structures are designed to be brief, extending to a maximum period of 36 months.

Ideal For

Kiva’s unique model is a game-changer for businesses deeply rooted in community ethos. Those who can harness community goodwill and support find Kiva to be an invaluable ally. Instead of solely relying on conventional credit scores, Kiva places importance on “social credit”. This metric is an assessment of a borrower’s credibility within the community, emphasizing the significance of trust and reliability in financial transactions.

PayPal Working Capital: A Prime Solution for Businesses Without Credit Worries

PayPal has carved a niche for itself with its innovative “Working Capital” loan. Unlike conventional loans, it mirrors the functionality of a merchant cash advance. This model introduces flexibility for entrepreneurs, allowing them to set a predetermined percentage from their forthcoming sales that will automatically go towards loan repayments.

The dual factors of this chosen percentage, coupled with anticipated sales, provide a clear repayment roadmap.


Key Features

  • Customizable Repayment: Businesses can set their repayment percentage based on comfort and projected sales;
  • Repayment Timeline: Determined by the intersection of the set percentage and predicted sales volume.

The Unique Selling Proposition: No Stringent Credit Requirements

PayPal’s unique approach with their working capital loan is a departure from the norm. Traditional lenders often place heavy emphasis on credit scores, but PayPal’s model prioritizes your business activities. The approval doesn’t hinge on a credit score but rather on your sales throughput on PayPal.

Criteria for Approval

  • Sales Volume: At least $15,000 in sales for those with a PayPal Business account or a minimum of $20,000 for those with a Premier account;
  • Cost Transparency: Instead of a fluctuating APR, PayPal sets a transparent, one-time fee. However, to ascertain the exact cost, a formal application is necessary.

The Ideal Candidate for PayPal Working Capital

PayPal’s tailored loans cater to a specific set of entrepreneurs:

  • Businesses recording moderate to low revenue;
  • Entrepreneurs comfortable with accelerated repayment schemes;
  • Must possess either a PayPal Business or Premier account, and have been active for a minimum duration of 90 days.

Insights and Tips

  • PayPal Working Capital can be an excellent solution for startups or small businesses finding it tough to secure traditional loans due to credit constraints;
  • It’s imperative to evaluate whether the repayment percentage selected might strain the business’s cash flow;
  • Always compare the one-time fee against traditional loan APRs to ensure financial prudence;
  • Regularly reviewing sales forecasts will aid in better understanding and managing repayment schedules.

Unlocking Business Financing with Bad Credit: A Comprehensive Guide

Securing a business loan with a less-than-stellar credit history may seem challenging, but it’s entirely possible with the right strategy. Here’s a step-by-step plan to help you access the financing your business needs, even when your credit score isn’t ideal.

Assess Your Credit

Before diving into the loan application process, it’s crucial to assess your credit situation. Knowing what lenders see when they evaluate your creditworthiness is the first step. You can access your credit score for free on platforms like NerdWallet.

Additionally, obtain your personal credit report from the three major reporting bureaus through AnnualCreditReport.com. Don’t forget to check your business credit scores, which are available from Experian, Equifax, and Dun & Bradstreet.

Elevate Your Credit Score

If your credit score leaves room for improvement, consider these strategies to boost it before applying for business financing:

  • Error Check: Scrutinize your credit reports for errors and dispute any discrepancies with the relevant credit bureau;
  • Timely Payments: Make more frequent payments on existing debts to demonstrate improved credit responsibility;
  • Debt Reduction: Pay down or pay off outstanding debts to enhance both personal and business credit scores.

Calculate Affordability

Having a low credit score may result in higher interest rates, making loan repayment more challenging. To determine how much debt you can comfortably manage, consider the following factors:

  • Funding Needs: Calculate the exact amount your business requires;
  • Interest Rates: Estimate potential interest rates based on your creditworthiness;
  • Additional Fees: Account for any fees associated with the loan;
  • Repayment Schedule: Decide whether daily, weekly, or monthly payments suit your business.

Remember, the term length of your loan affects payment size and total interest paid. Shorter terms yield larger payments but lower interest costs, while longer terms offer smaller payments with higher overall interest expenses.

Know Your Eligibility

Lenders look beyond credit scores when evaluating business loan applicants. They also consider factors such as:

  • Business Longevity: The longer your business has been operational, the more appealing it is to lenders;
  • Annual Revenue: Demonstrating consistent revenue growth can improve your chances;
  • Cash Flow: Strong cash flow indicates financial stability;
  • Collateral: Offering collateral can offset poor credit.

Strengthen Your Application

Highlight your business’s strengths in your loan application to compensate for a less-than-ideal credit score:

  • Collateral: If available, offer more collateral than the minimum requirement;
  • Success Stories: Showcase your business’s achievements and growth;
  • Explain the Past: If your credit issues stem from a recent bankruptcy or loan default, provide context and demonstrate your recovery plan.

Consider a Cosigner


A cosigner with a higher credit score and strong personal assets can significantly improve your loan approval chances. If you default on the loan, the cosigner assumes responsibility for repayment.

Engage with a Loan Officer

When working with a loan officer, address your credit challenges proactively. Discuss your credit profile openly and collaboratively strategize on ways to present your case more favorably.

Comparison Shop for the Best Loan

Don’t settle for the first loan offer that comes your way. Take the time to explore different lenders and their offerings. Consider the following factors when making your choice:

  • Loan Types: Identify which loan types align with your business’s needs;
  • Interest Rates and Fees: Compare interest rates and any associated fees;
  • Repayment Terms: Evaluate term lengths and repayment structures;
  • Funding Speed: Determine how quickly you need the funds;
  • Qualification Requirements: Ensure you meet the lender’s eligibility criteria;
  • Lender Reputation: Research the lender’s reputation and customer reviews.

Be cautious of lenders who rush you through the application process or fail to provide transparent loan terms and rates upfront. Predatory lenders may try to exploit your financial challenges with promises of guaranteed approval or no credit checks, so exercise due diligence in your search.

By following these comprehensive steps and being diligent in your approach, you can secure a business loan even with a less-than-ideal credit history, paving the way for your business’s growth and success.


In conclusion, bad credit small business loans offer a lifeline to entrepreneurs facing financial challenges and credit setbacks. While the journey to securing such loans may be more arduous and expensive, they can provide crucial access to capital for those who might otherwise be left without options.

It is essential, however, for borrowers to exercise caution, conduct thorough research, and explore alternative financing avenues before committing to a bad credit small business loan.

By carefully assessing their financial situation and diligently managing their loan obligations, entrepreneurs can not only rebuild their credit but also achieve their business goals and aspirations.

Ultimately, while bad credit may present obstacles, it should not be a barrier to entrepreneurial success, thanks to the availability of these specialized financing options.