Best Business Loans for Bad Credit in 2025

Securing a business loan with bad credit may seem like an uphill battle, but it’s not impossible. Many business owners with less-than-perfect credit find themselves in need of financing for growth, inventory, or overcoming cash flow problems. In 2025, the landscape for bad credit business loans has evolved, with a range of lenders offering tailored solutions to help entrepreneurs get the capital they need, even if they don’t have a stellar credit score.

Bad credit doesn’t have to stand in the way of your business goals. By understanding your loan options and knowing where to find lenders that are more lenient with credit score requirements, you can secure the funding necessary to keep your business running smoothly. This guide will explore the best bad credit business loans, the impact of bad credit on your loan options, and tips for getting approved without a high credit score.

Compare Top Lenders with Low Credit Score Requirements

When it comes to securing business loans with bad credit, not all lenders have the same requirements. Some lenders specialize in providing financing options for business owners with poor credit, offering flexible terms and more lenient approval criteria. Here’s a breakdown of some of the top lenders for bad credit business loans in 2025:

Lender	Minimum Credit Score	Loan Amount	APR Range	Loan Term
Fundbox	500	$1,000 – $150,000	4.66% – 8.99%	12 – 24 weeks
Kabbage	600	$2,000 – $250,000	15% – 30%	6 – 12 months
BlueVine	600	$5,000 – $250,000	4.8% – 51.8%	6 – 12 months
OnDeck	600	$5,000 – $100,000	11.89% – 36.99%	3 – 36 months
Lendio	600	$1,000 – $500,000	Varies	6 – 36 months

These lenders cater specifically to businesses with bad credit, offering various loan types such as lines of credit, term loans, and invoice factoring. Each lender has its own set of eligibility criteria and loan conditions, so it’s essential to compare their terms carefully to ensure you are getting the best deal for your situation.

How Bad Credit Affects Your Loan Options

Bad credit can significantly impact your loan options, but it doesn’t necessarily mean you’re locked out of receiving financing. Here’s how your credit score affects the types of loans you can access:

Higher Interest Rates: With a lower credit score, you’re likely to face higher interest rates. Lenders compensate for the increased risk by charging more for the loan. This can significantly increase your total repayment amount.
Shorter Loan Terms: Lenders may offer shorter loan terms to mitigate the risk associated with lending to businesses with bad credit. This can result in higher monthly payments, though the total interest paid over time may be lower.
Lower Loan Amounts: When you have bad credit, lenders are less likely to approve large loan amounts. If they do, you may be required to provide collateral or a personal guarantee to secure the loan.
Stricter Approval Criteria: In addition to reviewing your credit score, lenders may also look at your business’s revenue, time in business, and cash flow to evaluate your ability to repay the loan.

While these factors may present challenges, there are still ways to secure the funding you need. Understanding how bad credit impacts your loan options will help you make better decisions when shopping for a loan.

Types of Business Loans Available for Low Credit Scores

Even with bad credit, there are various types of business loans you can apply for. Each loan type comes with its own set of requirements and terms, so it’s important to consider your business’s needs before deciding. Here are some common loan types available for businesses with low credit scores:

Term Loans: Term loans provide a lump sum of money that you repay over a set period, typically with fixed interest rates. This is a good option for businesses needing a specific amount of capital for expansion or inventory purchases.
Lines of Credit: A business line of credit functions similarly to a credit card, allowing you to borrow up to a certain limit and pay interest only on the amount you use. This type of financing is useful for businesses with fluctuating cash flow needs.
Invoice Factoring: With invoice factoring, you sell your accounts receivable (invoices) to a lender in exchange for immediate funds. This is a good option for businesses with outstanding invoices but needing quick access to cash.
SBA Microloans: While SBA loans are typically reserved for businesses with good credit, the SBA Microloan program offers loans of up to $50,000 to small businesses with less stringent credit requirements. These loans are ideal for smaller businesses needing working capital or equipment.
Merchant Cash Advances: A merchant cash advance (MCA) is a short-term loan where the lender advances money against your future credit card sales. It’s fast and easy to qualify for but often comes with high fees and interest rates.

Each loan type has its pros and cons, so it’s important to carefully assess your business’s needs and financial situation before choosing a loan product.

Where to Find Lenders That Approve Bad Credit Applications

There are several places you can look to find lenders that approve applications for bad credit:

Online Lenders: Online lenders, such as Fundbox, Kabbage, and BlueVine, often have more flexible approval criteria and can be a great option for businesses with bad credit. Their fast application process and fast funding make them popular choices for entrepreneurs in need of quick cash.
Community Banks: Some community banks may offer loans to businesses with bad credit, especially if the business has a strong local presence or provides significant value to the community.
Credit Unions: Credit unions typically offer more personalized services and may have more lenient lending criteria for their members. If you’re a member of a credit union, it’s worth checking their loan offerings.
Peer-to-Peer Lending Platforms: Platforms like LendingClub and Prosper connect borrowers with individual investors, offering a more flexible approach to lending. While interest rates may be higher for bad credit applicants, these platforms provide an opportunity for businesses that may not qualify with traditional lenders.
Alternative Lenders: Some non-traditional financial institutions specialize in providing loans to businesses with poor credit. These lenders may offer higher rates, but they can provide faster access to funds without requiring perfect credit scores.

How To Apply for a Same-Day Business Loan

Getting a business loan quickly is crucial for many business owners, and same-day loans can provide the fast capital you need to take advantage of opportunities or cover immediate expenses. Here’s how to apply for a same-day business loan:

Gather Your Documents: Prepare the necessary documents such as financial statements, proof of business income, and tax returns. Having everything ready speeds up the approval process.
Choose a Lender: Select a lender known for offering quick approval and same-day funding, such as Kabbage or Fundbox. Online lenders typically provide the fastest approval times.
Submit Your Application: Apply online and provide all requested information. Many online lenders have simplified applications that you can complete in just a few minutes.
Receive Funding: If approved, you can receive funds within hours or by the end of the day, depending on the lender’s policies.

Short-Term vs. Long-Term Loan Options

When applying for a business loan, you’ll encounter two main types of loan terms: short-term and long-term loans. Here’s a breakdown of the differences:

Loan Type	Loan Term	Interest Rates	Best For
Short-Term Loans	3 – 18 months	11% – 36% APR	Quick funding, small loans
Long-Term Loans	24 – 84 months	6% – 15% APR	Large purchases, expansions

Short-Term Loans: These loans typically offer quick approval and fast funding, but they come with higher interest rates and shorter repayment periods. They’re ideal for businesses needing fast cash for urgent expenses.
Long-Term Loans: While long-term loans offer lower interest rates, they come with longer repayment periods. These loans are better suited for larger, more strategic investments, such as business expansions or equipment purchases.

Alternative Financing Options

If you have bad credit and traditional loans are not an option, consider alternative financing methods:

Crowdfunding: Raise funds from a large number of people via online platforms like Kickstarter or GoFundMe. This is a great option for businesses with a compelling story or innovative products.
Business Credit Cards: If you have a poor credit score, a business credit card may be a good option for short-term expenses. Many credit cards offer rewards, and you can carry a balance if necessary, though interest rates tend to be high.
Friends and Family: Borrowing money from friends and family can provide you with fast capital, but it’s essential to approach this option carefully and ensure clear terms to avoid damaging relationships.

How Interest Rates and Terms Differ for Bad Credit Loans

Loans for businesses with bad credit typically come with higher interest rates and less favorable terms. Here’s what you should expect:

Higher APRs: Interest rates for bad credit loans typically range from 10% to 35%, which is much higher than the rates available for borrowers with excellent credit.
Shorter Terms: Lenders may offer shorter repayment terms to reduce their risk, which can lead to higher monthly payments but lower overall interest costs.
Secured vs. Unsecured Loans: Businesses with bad credit may be required to offer collateral for loans, such as inventory or equipment. While secured loans tend to offer lower interest rates, they come with the risk of losing your assets if you default.

Tips for Comparing Business Loans for Bad Credit

When comparing bad credit business loans, consider the following factors:

APR: Always compare APRs to find the most affordable option.
Repayment Terms: Choose a loan with terms that align with your business’s ability to repay.
Fees: Look for hidden fees such as origination fees or prepayment penalties.
Approval Time: If you need fast cash, prioritize lenders with quick approval and funding processes.

Minimum Requirements for Bad Credit Business Loans

Most lenders will have minimum requirements for bad credit business loans, such as:

Minimum Credit Score: Typically, a minimum credit score of 600 is required.
Business History: Lenders generally prefer businesses that have been in operation for at least 6 months to a year.
Annual Revenue: A minimum annual revenue of $50,000 is often required.

Documents You’ll Need to Apply

When applying for a bad credit business loan, you’ll typically need the following documents:

Tax Returns: Personal and business tax returns for the last 1-2 years.
Financial Statements: Profit and loss statements and balance sheets.
Bank Statements: Recent business bank statements.
Personal Identification: Proof of identity, such as a driver’s license or passport.

Steps to Improve Your Business Credit Score Over Time

Pay bills on time: Consistently paying your bills on time will help improve your credit score.
Reduce debt: Work on paying down any outstanding debts to lower your debt-to-income ratio.
Check your credit report: Regularly monitor your credit report for inaccuracies and dispute any errors.

How to Avoid Predatory Lenders

Predatory lenders prey on business owners with bad credit, offering high-interest loans and hidden fees. To avoid them, always:

Read the fine print: Understand all the fees and terms before signing.
Research the lender: Check reviews and confirm that the lender is reputable.
Avoid lenders who promise guaranteed approval: Legitimate lenders will assess your creditworthiness before offering a loan.

How Fast Can You Get Funded with Bad Credit?

Many online lenders can approve your application and fund your loan in as little as 24 to 48 hours, depending on the lender and the loan type.

What Are the Risks of Taking Out a High-Interest Business Loan?

High-interest loans can lead to significant debt over time. They may also strain your cash flow with high monthly payments, making it difficult for your business to thrive.

FAQs

Can I get a loan with bad business credit?

Yes, many lenders offer bad credit business loans with higher interest rates and flexible terms.

Which business loans work best for bad credit?

Online lenders, peer-to-peer lending platforms, and invoice factoring are great options for businesses with bad credit.

What credit score is needed for a business loan?

Typically, a score of 600 or higher is required, but some lenders may offer loans to those with lower scores.

What score do you need for an SBA loan?

For SBA loans, you typically need a credit score of 680 or higher.

What if I’m denied a loan due to poor credit?

Consider securing a loan with a co-signer, offering collateral, or seeking alternative financing options like merchant cash advances.

Bad Credit Business Loans – Get Approved Without a High Score