The Top Best Business Loans For Startups With Bad Credit in 2023

business loans for startups with bad credit
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People with bad credit can receive business loans for startups, although they can be costly. If you have bad credit and you want to take on this path, be sure that your business can handle the charges. Here, we’ll see how you can qualify for a startup business loan, even with bad credit, as well as top lenders you can rely on.

Can Business Startups Obtain Loans With Bad Credit?

The difficulties you’ll have applying for a startup business loan with bad credit are ultimately determined by your credit score. If your score is between 700 and 800, you have a good probability of being approved. If your credit score is less than 680, you may have problems obtaining approval for many startup business loans; nevertheless, there are alternative choices accessible to you, such as invoice factoring.

By satisfying other standards, you can put yourself in a good position to get approved for a new business loan even if your credit score is low. For example, if you can provide collateral (such as real estate, equipment, or an automobile), you can improve your chances. You can also increase your chances of approval if you have experience in the field of your business, such as if you are a construction worker starting your own contracting company.

If your credit score is extremely low, you should consider alternative funding methods that do not require a loan application. Many businesses have been funded through personal savings, investments from family and friends, and crowdfunding platforms such as Kickstarter.

How to Get Business Loans For Startups Even With Bad Credit

If your credit score is at least 680, you can go through the startup business loan application process knowing that you meet the minimum score for qualification. However, it is best practice to ensure that you meet all of the other application requirements, such as being in business for at least 6 months—the longer the better. Consider the assets you can use as collateral. Next, create a good business plan—this will be useful for lenders, but it will also help you navigate your company’s future.

If you don’t have the required credit score for a startup loan, you should broaden your search to uncover financing options that don’t require better credit scores. Importantly, many loan applications perform a hard draw on your credit, which means that the lender demands a copy of your credit history. This move normally has a negative influence on your credit score, so proceed with caution when requesting funding, especially if you don’t believe you’ll qualify.

What Credit Score Is Needed For A Startup Business Loan?

Although eligibility requirements vary by lender, a startup business loan typically requires a minimum credit score of 600, at least six months in operation, and consistent revenue.

Where To Recieve Business Loans For Startups With Bad Credit

Banks and other traditional lenders frequently refuse to lend to startups, particularly those with bad credit, because these companies lack an established financial history to demonstrate their ability to repay their obligations. Online lenders typically require one year in business, whereas banks frequently require two or more.

With bad credit, it is possible to obtain a new business loan, but your alternatives will be limited – and perhaps pricey. Here are some options to think about.

#1. Online Lenders 

Online lenders may provide business loans to startups that are less than a year old or whose owners have bad credit. In general, these loans will have high annual percentage rates because startup applicants with poor credit are viewed as riskier by lenders.

To qualify, your startup must already be making money. The Fundbox line of credit, for example, requires at least $8,333 in monthly income. These loans often do not require collateral, though lenders may request a personal guarantee.

Online lenders may provide a variety of business loans, including short-term loans, business lines of credit, and invoice finance. Some companies also provide merchant cash advances. In this case, you obtain a large sum of money and return it using a percentage of your credit card sales. However, given of their impact on cash flow and exorbitant prices (APRs can reach 350%), you should exhaust all other choices before considering an MCA.

#2. Community Development Finance Institutions 

CDFIs, or community development finance institutions, receive funds to assist underserved communities. Startups with limited resources, opportunities, or financial access may be able to obtain business loans from a CDFI, even if they have poor credit.

CDFIs, which are primarily banks and credit unions, may offer competitive rates if you meet certain criteria. However, approvals might take time, so your company must be prepared to wait for cash.

On the CDFI Fund website, you may get a complete list of community development institutions in your state.

#3. Microlenders

Microlenders, like CDFIs, frequently focus on giving financing to traditionally marginalized persons, such as minority company owners, who may be underbanked and lack credit. A microloan, if you qualify, can be a useful option for bad-credit firms with tiny cash gaps. Loans are often for $50,000 or less.

Some microlenders also make loans through the Small Business Administration’s microloan program, which is specifically meant to assist women, low-income, veteran, and minority entrepreneurs, as well as startups and micro businesses. Although prices and periods differ depending on the micro-lender, the scheme normally provides competitive interest rates and terms of up to seven years.

#4. Merchant finance companies

Merchant finance is typically supplied by a company that accepts credit or debit card payments, such as PayPal or Square. It’s often easier to qualify for than a company loan. For example, when giving working capital loans, PayPal just evaluates your sales history, not your credit score. Until the loan is paid off, the lender takes a fixed percentage of your sales.

For firms with stable revenue but poor credit, merchant financing may be an alternative. However, it is usually significantly more expensive than online business loans or microloans, so we recommend exploring other choices first.

Best Business Loans For Startups with Bad Credit

These options, which include crowdsourcing, equipment finance, short-term loans, lines of credit, and PayPal loans, can be accessible by small business startups with low credit or no revenue.

#1. National Business Capital 

National Business Capital is an online loan platform with 75+ lenders that operates on a similar business strategy to Lendio. Borrowers interested in company finance can select from a variety of options, including typical small business loans, lines of credit, equipment financing, and SBA loans. Rates can be costly, but financing is quick and simple to obtain, even if you are a startup with terrible credit.


Startups with poor credit will have the best chance of obtaining a small company loan or equipment finance loans from National Business Capital (their LOCs and SBA loans have higher minimum requirements). National Business Capital has extremely minimal credit requirements for funding. However, candidates with a credit score of 650 or higher may be able to qualify for funding even if they have no business experience or sales revenue.

#2. Lendio

Lendio is a simple online loan matching tool that allows you to compare and apply for several business loans in 15 minutes and get funded in as little as 24 hours. It no longer posts precise borrower requirements, although it can frequently locate lenders ready to work with people who have bad credit. You can prequalify for equipment financing, merchant cash advances (MCAs), short-term loans (STLs), lines of credit (LOCs), Small Business Administration (SBA) loans, and more by using this tool.

Lendio’s network includes over 75 lenders, including well-known brands like Kabbage Funding, OnDeck, Amex, and BlueVine. Lendio collaborates with Balboa Capital, B2B Leasing, Simmons Bank, and others in the equipment finance industry.


Any business can apply for Lendio. However, for the best chance of getting funded, Lendio used to recommend that you have six months in business and make at least $10K monthly, in addition to a 550+ credit score. Lendio no longer lists these guidelines, although they’re probably not too far off.

#3. Upstart

Personal loans allow new firms to get startup funding even if they lack company qualifications. Upstart, a lending platform that partners with banks to give personal loans ranging from $1,000 to $50,000, is one personal loan alternative for businesses.

Upstart loans have maturities of three or five years, with monthly payments. When you accept an Upstart loan offer, the funds are normally deposited into your account the next business day. Rates for Upstart APRs commonly range from 6.5% to 35.99%.


The minimal credit score for Upstart is only 600. (technically fair but still subprime). Notably, Upstart will examine applicants with no credit – that is, those who lack the sufficient credit history to earn a FICO score.

Upstart’s underwriting process makes lending decisions based on education, employment, and a variety of other factors. That means that college graduates and/or people with a consistent work history may have an advantage when applying. The sole personal income criterion is that you earn $12,000 per year.

#4. Fundbox

Fundbox offers revolving lines of credit, a handy loan instrument for newer firms with subprime credit. Though short-term loans may not be a good fit if your credit is entirely ruined or your firm isn’t yet generating money, Fundbox loans are quite accessible to enterprises that have been in operation for six months and are currently generating revenue. Businesses can receive a funding decision within three minutes of filing an application, and funds can be deposited into your account as soon as the following business day.


Fundbox is suited for both startups and subprime-credit borrowers, with a minimum credit score of 600 and a six-month minimum tenure in operation. Your company must earn at least $100,000 per year, and candidates with weak credit will be denied.

You will also be required to repay the loan promptly – in 12 or 24 weeks, depending on your offer — and the maximum loan amount is $150,000.

#5. Credibly

Credibly offers a variety of short-term loans, including merchant cash advances and working capital loans of up to $400K, business lines of credit of up to $250K, and others. This company is welcoming to startups — however, you must have been in business for six months — and will accept you even if you have bad credit. Woo-hoo!

It should be noted that some of Credibly’s products, such as its lines of credit, are made available through Credibly’s network of external finance partners rather than directly through Credibly.


Credibly’s working capital loans and MCAs demand only a 500 credit score. However, business lines of credit are available to candidates with 560+ personal credit.

Credibly’s income requirements vary by product, but they are on the high side when compared to those of some other online lenders; to qualify for a working capital loan or MCA, your firm must generate $15K per month ($180K per year).

#6. Avant

Avant is a recognized provider of small personal installment loans ranging from $2K to $35K that can be utilized for business purposes, such as beginning costs. It also takes credit scores that would be rejected by other personal lenders.


Avant offers loans to clients with credit ratings as low as 580.

While Avant welcomes borrowers with subprime credit (but not extremely poor credit), you may be denied funding for other reasons, such as a lack of personal income to fulfill the incremental payments. It does not, however, have any company income criteria.

#7. Paypal Working Capital 

PayPal Working Capital provides short-term loans that work in the same way as merchant cash advances. These loans do not require a credit score and are wonderful options to consider if you already do business with PayPal.

PayPal’s Working Capital, like most other short-term financing solutions, does not charge interest. Instead, you are charged a one-time fee that must be repaid in addition to the loan. PayPal will then deduct a tiny percentage of your daily sales until the loan and charge are repaid.


As previously stated, there are no credit score criteria for these loans. Instead, you must meet the following criteria:

  • Your company must have had a PayPal Business or Premier account for at least 90 days.
  • If you have a Premier account, you must handle $20,000 or more in yearly PayPal sales, or $15,000 or more in annual PayPal sales if you have a Business account.
  • You must have cleared any previous PayPal Working Capital loan.

#8. Accion

Accion is a non-profit CDFI that provides startup and current businesses with short- and medium-term installment loans. These loan products generally consist of micro-loans around $50,000, but there are also offers for loans up to $1 million.

Accion focuses on financing to minority-owned and women-owned businesses as part of its charity mission.


You must have a credit score of 575 (or 550 in some places) and sufficient cash flow to repay an Accion loan. Startups must also have less than $3K in outstanding debt, a business plan with a 12-month cash flow projection, and a referral from a partner (such as SCORE or SBDC).

#9. KIVA 

Kiva U.S. is a non-profit organization that provides interest-free loans to small businesses in their communities. The organization provides small, crowdfunded loans to entrepreneurs all across the world, while Kiva U.S. is particularly for enterprises in the United States. Individual lenders provide funding for these loans in quantities as low as $25 per lender.


Some of Kiva’s advantages include the fact that there is no credit check and that you do not need any business experience or revenue to apply. Even better, no interest or fees are levied, and you can repay using a flexible, affordable repayment plan. However, this does not imply that anyone can simply obtain a “free” loan.

Kiva prefers community-minded businesses with a compelling story – after all, this is debt crowdfunding, so you must persuade people browsing the site to lend to your firm rather than another.

Can I Still Start A Business With Bad Credit?

Because your new business does not yet have its own credit score, lenders will base their decision on your personal credit score. Despite your poor personal credit, you can start a business.

Can I Get a Business Loan With a 500 Credit Score?

As hard as it may seem, some lenders do offer bad credit business loans for credit scores as low as 500.  

What is The Lowest Business Credit Score?

Business credit scores range from 0 to 100, with most small business lending companies requiring a minimum of 75.

In Conclusion,

Getting business loans with bad credit isn’t hard after all, but it isn’t that easy either. The best business loans for startups with bad credit have been listed in this article, along with their eligibility criteria. Study them and determine which works best for you.

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