The Best Small Business Loans for Bad Credit for 2021 - Investopedia

The Best Small Business Loans for Bad Credit for 2021 - Investopedia

The Best Small Business Loans for Bad Credit for 2021 - Investopedia

Posted: 19 Mar 2021 12:00 AM PDT

Bottom Line

Small business loans help you expand operations, cover payroll, pay for supplies, and manage cash flow. When you have poor credit, finding a lender can be difficult, but there are many loan options available with credit scores as low as 500. Some lenders don't even have a minimum score, and instead, look at overall business health. 

We recommend OnDeck for your small business loan needs if you have bad credit because it offers same-day funding with a minimum credit score of 600. It also rewards loyalty—after paying back half your loan you can apply for more money and you won't be charged any remaining interest on your original loan. 

Compare Providers

  Small Business Loan   Wins For   Key Benefit
OnDeck Best Overall Same-day funding and minimum credit score of 600
PayPal Best Short-Term Loans Loan terms between 13 and 52 weeks
Lendio Best Line of Credit Pay interest only on the funds you use with no obligation to use it
BlueVine Best for Invoice Factoring Receive funding in 24 hours with a low credit score and a short time in business
Rapid Finance Best for Long-Term Financing Loan terms up to 60 months and fast funding
Credibly Best for High Revenue Minimum credit score of 500 provided you have $15,000 in monthly revenue

Frequently Asked Questions

What Is a Personal Guarantee?

A personal guarantee means that the business owner assumes the business debt in the event the business is unable to repay it. This helps protect the lender in the event of default, and also makes it easier for a business to qualify for a loan when they might not have without a personal guarantee.  

What Credit Score Do You Need for an SBA Loan?

The Small Business Association (SBA) does not specify a minimum credit score required to secure an SBA loan. However, SBA loans are provided by lenders who may have minimum score requirements. Typically, this minimum is 620 to 640. However, the higher your score, the more likely you are to receive approval. 

Is It Possible to Get a Business Loan With Bad Credit?

Yes, it's possible to get a business loan with bad credit. Some lenders don't have a minimum credit score and look at the overall health of the business instead. However, you can expect to pay higher fees or have a higher APR if you have bad credit. 

What Is the Easiest Business Loan to Get?

The easier business loan to get is one that is secured. This means the loan is backed by collateral, and the lender gets that collateral if the business owner defaults on the loan. The collateral pledged usually includes property, inventory, equipment, savings accounts, blanket liens, and personal guarantees. 

How We Chose the Best Small Business Loans for Bad Credit

We looked at 19 of the best small business loans available and narrowed it down to the best six options for bad credit based on several features and considerations. We considered rates, credit score requirements, loan amounts, and repayment terms. Reviews of customer service, sales, and ease of use weighed heavily into our decision—obtaining a small business loan should be a pleasant, stress-free experience for business owners.


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