Small business loans can be instrumental in helping businesses reach new heights. Getting approved for them, however, can sometimes be challenging for borrowers with lower personal credit scores (think scores below 670).
Small Business Administration (SBA) microloans are ideal for those with bad credit as they often have less strict eligibility requirements than other government-backed loans and still offer lower interest rates. However, the loan application process can be lengthy and the maximum you can borrow is just $50,000. So, many small businesses with bad credit will need to turn to private lenders.
If your small business needs a boost but you have a low credit score, consider these business loans for bad credit. We evaluated each loan on a range of features, including minimum and maximum loan amounts, repayment periods, personal credit score needed, Better Business Bureau rating and business requirements to apply. (Read more about ourmethodologybelow.)
Best bad credit small business loans
- Best for next-day funding: OnDeck
- Best for microloans: Kiva
- Best for borrowing higher amounts: National Funding
- Best for secured loan options: Greenbox Capital
Best for next-day funding
OnDeck
Types of loans
Term loan
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $250,000
Terms
Up to 24 months
Minimum credit score needed
625
Minimum requirements
In business at least 1 year, $100,000 annual revenue, business bank account
Terms apply.
Pros
- Potential for same-day cash disbursement (only available in certain states, for term loans up to $100,000)
- Top-tier A+ rating with the BBB
- Low minimum credit score
- Fixed monthly payments
- 100% Prepayment Benefit option, so you can pay your loan off early without any penalty or fee
Cons
- Doesn't lend to businesses in Nevada, North Dakota or South Dakota
- Early prepayment fee if you don't qualify for the 100% Prepayment Benefit
OnDeck boasts a speedy funding process that begins with an application that takes just 10 minutes to complete, according to the lender. Its term loans have a minimum credit score requirement of 625, making it a more accessible option for those with lower credit scores. To qualify, borrowers must have been in business for at least one year, have at least $100,000 in annual revenue and have a business bank account, so this lender may not be the best option for newly launched businesses or those who need funding for a start-up.
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Best for microloans
Kiva
Types of loans
Peer-to-peer crowdfunded loan
Better Business Bureau (BBB) rating
N/A
Loan amounts
$1,000 to $15,000
Terms
Up to 3 years
Minimum credit score needed
No minimum credit score required
Minimum requirements
You must be 18, live in the U.S., use this loan for business purposes, not currently in foreclosure, bankruptcy or have any liens, and have a small number of your friends and family willing to make a loan to you (Nevada and North Dakota residents are not ineligible)
Terms apply.
Pros
- Ability to borrow with no interest
- Loans are geared toward borrowers who are unbanked and have trouble qualifying for financial products
- Ability to market your product to 1.6 million lenders on Kiva
Cons
- You need to prove your creditworthiness by inviting friends and family to lend to you
- It can take a while to receive your loan since investors need to raise money
- No BBB rating
Kiva uses crowdfunding to lend money to small business owners. This lender doesn't have a minimum credit score requirement, making it a more accessible option to those who may not qualify for loans that require higher credit scores. The maximum amount of funding it offers is $15,000, so it's geared toward businesses with low start-up costs.
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Best for borrowing higher amounts
National Funding
Types of loans
Working capital loans, short term loans, equipment financing loans
Better Business Bureau (BBB) rating
A+
Loan amounts
Up to $500,000
Terms
Up to 5 years, depending on the loan type
Minimum credit score needed
Not disclosed
Minimum requirements
Must be in operation for at least six months and have at least $250,000 in annual sales
See our methodology, terms apply.
Pros
- Offers a higher funding amount at $500,000
- No-cost application
- Application approval in as little as 24 hours
- Doesn't require collateral
- Offers an early payoff discount
Cons
- High annual sales requirement to qualify for the loan
National Funding is ideal for borrowers with lower credit scores who need to borrow higher amounts of money. When applying for a bad credit loan, this lender will consider factors like the amount of time in business and annual gross sales. Eligible borrowers can apply for as much as $400,000 in funding, much more than the $250,000 maximum small business lenders commonly offer.
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Best for secured loan options
Greenbox Capital
Types of loans
Term loan, business line of credit, invoice factoring, merchant cash advance
Better Business Bureau (BBB) rating
A+
Loan amounts
Up to $500,000
Terms
Not disclosed
Minimum credit score needed
Not disclosed
Minimum requirements
Must be in operation for at least five months
Terms apply.
Pros
- Funding amounts between $3,000 and $500,000
- Borrowers could get funded in as little as one business day
- Applicants get connected with a Funding Advisor to walk through funding options
- Options available for borrowers with lower credit scores
Cons
- Repayment terms for collateral loans may err on the shorter side
Greenbox Capital allows borrowers to get up to $500,000 as a business line of credit or up to $250,000 as a secured loan. Secured loans are easier to be approved for since you'll have to put up some collateral to receive the loan. The lender considers factors beyond your credit when evaluating your application, such as business revenue, cash flow, vendor payment history, years in business and public records.
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More on our picks for the best bad credit business loans
OnDeck
OnDeck has disbursed over $15 billion to businesses in the U.S. and has an impressive A+ rating from the Better Business Bureau (BBB). Potential borrowers can check their eligibility without harming their credit score.
Eligible borrowers
Must be in business for at least one year, have $100,000 annual revenue and have a business bank account
Loan amounts
$5,000 to $250,000
Loan terms
Up to 18 months
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Kiva
Kiva is a peer-based lending platform that offers crowdfunded loans. Crowdfunded loans are raised by having a large amount of people contribute small amounts of money to generate a lump sum. After you apply, you'll have 15 days to invite your friends and family to lend money to your business and then Kiva will open it up to their network of lenders to help you raise money. Kiva has helped borrowers raise over $1 billion so far, according to its website.
Eligible borrowers
Must be at least 18 years old, living in the U.S. and use the funds for business purposes only
Loan amounts
Up to $15,000
Loan terms
Up to 3 years
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National Funding
National Funding offers three main funding solutions to small businesses: working capital loans, short-term business loans and equipment financing loans. It offers loans that service a variety of industries, including beauty and wellness, restaurants, agriculture businesses and more. This lender has provided over $4.5 billion in funding to businesses and has an A+ rating from the BBB.
Eligible borrowers
Must be in operation for at least six months and have at least $250,000 in annual sales
Loan amounts
Up to $400,000
Loan terms
Up to 5 years, depending on the loan type
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Greenbox Capital
Greenbox Capital offers a range on small business funding options, including collateral loans, merchant cash advances and business lines of credit. It funds businesses in most industries, including some high-risk industries. It does require businesses to be in operation for at least five months to receive funding so Greenbox is not for start-ups.
Eligible borrowers
Must be in operation for at least five months
Loan amounts
Up to $500,000
Loan terms
Not disclosed
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FAQs
How do you get a small business loan?
To get a small business loan, first figure out how much money you need to borrow and make a plan for how you'll use that funding. Then, look for a lender that can satisfy your desired loan amount. Make sure you meet the lender's eligibility criteria and then simply submit an application online (or in person if your lender has physical locations you can visit).
Is a small business loan secured or unsecured?
Small business loans can be either secured or unsecured, depending on the terms of your loan. Some lenders require that you secure the loan using collateral while others don't. It is often easier for borrowers with low credit to qualify for a secured loan.
Is a small business loan installment credit or revolving credit?
Small business loans are generally a type of installment credit since you promise to pay back the full amount in small, fixed increments over time.
How long does it take to get approved for a small business loan?
Small business loan approval times can vary by lender. Lenders often make an approval decision in just a few days, but keep in mind that a fast approval time can also be influenced by whether or not you submit all necessary documentation without any inaccuracies.
Bottom line
Small business loans with the best rates and terms generally go to borrowers with higher credit scores. But that doesn't mean you can't qualify for funding even with a lower credit score. Some borrowers tailor their terms and requirements to meet the needs of low-credit borrowers.
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Why trust CNBC Select?
AtCNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every small business loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products.While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. Seeour methodologyfor more information on how we choose the best bad credit small business loan lenders.
Our methodology
To determine which small business loans offer the best financing terms, CNBC Select analyzed a dozen U.S. loans offered by both online and brick-and-mortar lenders. We narrowed down our rankings by only considering traditional loans, including term loans, equipment loans, commercial real estate loans, microloans and franchise loans. For this roundup, we didn't evaluate business lines of credit, invoice factoring/financing, merchant cash advances since they either have a long application process (like SBA loans) or act differently than a traditional term loan, which gives you a lump sum that you pay back over a fixed time period.
We compared each small business loan on a range of features, including:
- Minimum and maximum loan amounts
- Length of term
- Credit score needed
- Application requirements
- Streamlined application process
- Fund disbursement
- Customer support
- Better Business Bureau rating
- Customer reviews, when available
The rates and fee structures for small business loans are subject to change without notice, and they often fluctuate in accordance with theprime rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee that the interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness.
To take out a small business loan, lenders will conduct a hard credit inquiry and request a full application, which could require both personal and business proof of income, identity verification, proof of address and more. You'll likely also need to put up collateral, which can include business equipment, real estate or personal assets.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
