Best Business Loans for Bad Credit

At one time or another, most businesses run into a situation in which they need more funding than they have. Some business owners will consider applying for a loan to obtain additional capital. Unfortunately, you may not have the sterling credit required to receive a loan from a bank with favorable terms and low interest rates. Where else can you turn if you can’t get a business loan?

An entire industry of alternative lenders aims to fill the gaps when banks are unwilling or unable to lend. This is especially useful if you have a poor business credit score. Accepting money from alternative lenders requires you to be savvy, however, or you could dig yourself deep into debt.

Best Business Loans for Bad Credit

Before we get into what lenders look for when approving borrowers and the terms you should expect, here’s a look at some of the best business loans for people with challenged credit.

Balboa Capital

Balboa Capital is willing to look at more than your credit score when underwriting loans. The other considerations include the number of years you’ve owned the business and its annual sales. With loans ranging from $5,000 to $5 million, the lender can meet many small business owners’ needs. Balboa Capital doesn’t require collateral and the company offers a variety of loan types and repayment terms from which to choose.

Rapid Finance

Building or rebuilding your credit takes time. If time is not on your side, consider reaching out to Rapid Finance. Although they do not specify a minimum credit score, they say they consider multiple factors when deciding whether to approve a loan. Rapid Finance offers a variety of loan types and funding between $5,000 and $1 million. Loans are typically funded on the same day as their approval. Rapid Finance doesn’t require a lot of paperwork to apply, which makes the process even quicker.

Noble Funding

Noble Funding is committed to working with its borrowers long after it approves the loan. You need a credit score of only 525 for a short-term loan approval. The lender is willing to look at other criteria and doesn’t require collateral or sometimes even a personal guarantee.

SBG Funding

To qualify for SBG Funding, you need a credit score of 500, six months in business, and at least $10,000 in monthly revenue. They don’t require collateral or lengthy paperwork. Loan terms range from six months to five years with same-day funding available.

What Types of Business Loans Can You Get with Bad Credit?

If your credit history isn’t good enough for a conventional loan, you can explore these options:

• Short-term loans: Includes lines of credit and term loans paid within 1–3 years. Often based more on cash flow than credit score.
• Hard-money loans: Secured by real estate instead of credit. Used for projects like property redevelopment.
• Invoice financing: Not technically a loan; you sell invoices to a factor at a discount (70–90%). Best for seasonal or growth needs.
• Merchant cash advance (MCA): Funded based on credit card sales. Lenders collect a portion of future receipts until repaid. Expensive and best used as a last resort.
• Microloans: SBA-backed, up to $50,000. Used for operating capital, equipment, and furniture. Average loan is ~$13,000.
• Business credit cards: Useful for improving cash flow. Approval possible even with bad credit, though with higher APRs.
• Equipment financing: Loans for equipment purchases or leasing. Less strict credit checks, as the equipment serves as collateral.

Note: Always research the lender. Review terms with a legal or financial expert before signing anything.

How to Qualify for a Short-Term Loan with Bad Credit

Short-term loans are similar to traditional loans but repaid faster. Here’s how to improve your chances:

1. Don’t be overleveraged: Most alternative lenders ask for a 1-page form and 3 months of bank statements.
2. Maintain your financials: Good bookkeeping helps fast-track approval and improves trust with lenders.

What Is the Credit Spectrum?

Lenders evaluate borrowers along a spectrum from very poor to excellent credit. Good credit leads to low-interest, long-term loans. Bad credit means more expensive, riskier options.

How Can You Begin Repairing Bad Credit?

Even if you can get funding, improving your credit helps in the long term. Here’s how:

1. Keep up with personal payments: Avoid maxing out credit cards. Always pay on time.
2. Make a plan for credit rehab: Business credit recovery requires planning and discipline.
3. Seek ways to reduce debt: Raise prices, ask vendors to extend payment terms, or negotiate with suppliers.