Getting turned down by banks is frustrating. Your credit score took a hit, but your business still needs funding to grow. The good news? Traditional banks aren't your only option.
Alternative lenders work with businesses that have bad credit. These companies look beyond credit scores and focus on your business performance, revenue, and cash flow. Here are five lenders that regularly approve businesses with poor credit histories.
What Counts as Bad Credit for Business Loans
Most traditional banks want to see credit scores between 650-700. Anything below 600 is typically considered bad credit. Alternative lenders work with much lower scores, sometimes as low as 500.
These lenders understand that credit problems don't always reflect your ability to run a profitable business. Maybe you had medical bills, went through a divorce, or faced other personal financial challenges. Your business might still be generating strong revenue and cash flow.
1. Bluevine: Best for Business Lines of Credit
Bluevine specializes in business lines of credit up to $250,000. You only pay interest on the money you actually use, making it perfect for managing cash flow gaps or seasonal fluctuations.
Key Features:
- Credit lines up to $250,000
- Only pay interest on funds you draw
- No maintenance fees or prepayment penalties
- Funding decisions within 5 minutes
- Money available within 24 hours
Requirements:
- 12 months in business minimum
- $120,000 annual revenue minimum
- Accepts bad credit applicants
Bluevine doesn't specify a minimum credit score, but they regularly approve businesses with poor credit. The application process is straightforward and mostly online. They don't lend in Nevada, North Dakota, or South Dakota.
2. Taycor Financial: Best for Equipment Financing
Need new equipment but don't have perfect credit? Taycor Financial offers 100% equipment financing with no down payment required. They're particularly good for startups and newer businesses.
Key Features:
- Loan amounts up to $2,000,000
- Interest rates starting at 4.99%
- Repayment terms from 12 to 84 months
- 100% financing with no down payment
- Approval within hours
Requirements:
- Minimum credit score of 550
- No minimum time in business
- No minimum revenue requirements
This makes Taycor especially valuable for new businesses that can't meet the revenue or business history requirements other lenders demand. The equipment itself serves as collateral, which reduces the lender's risk and your qualification requirements.
3. Credibly: Best for Fast Same-Day Funding
When you need money fast, Credibly delivers. They offer same-day funding and multiple loan products to meet different business needs.
Key Features:
- Loan amounts from $25,000 to $600,000
- Same-day funding available
- Multiple loan types available
- Terms up to 24 months
- Factor rate pricing structure
Requirements:
- Minimum credit score of 500
- 6 months in business minimum
- $180,000 annual revenue for working capital loans
- $240,000 annual revenue for lines of credit
Credibly uses factor rates instead of traditional interest rates. A 1.11 factor rate means you pay back 11% more than you borrowed. This makes it harder to compare with other lenders, but the speed and accessibility often make up for it.
4. Fora Financial: Best for Lower Credit Scores
Fora Financial works with credit scores as low as 570, making them one of the most accessible options for businesses with credit challenges.
Key Features:
- Loan amounts up to $1,500,000
- Terms from 4 to 18 months
- Flexible qualification requirements
- Multiple funding options
Requirements:
- Minimum credit score of 570
- Flexible business and revenue requirements
Fora Financial focuses heavily on your business performance rather than just credit scores. They look at bank statements, revenue trends, and cash flow to make lending decisions.
5. National Funding: Best for No Upfront Costs
National Funding has been in business since 1999 and charges zero upfront fees. They specialize in working with businesses that have credit challenges.
Key Features:
- Loan amounts up to $500,000
- No upfront costs or fees
- No collateral required
- 24-hour approval process
- No down payment needed
Requirements:
- Accepts bad credit applicants
- Flexible qualification standards
- Focus on business performance
National Funding takes a relationship-based approach to lending. They want to understand your business and help you succeed, not just process a transaction.
Alternative Options to Consider
Merchant Cash Advances: These provide quick funding but come with high costs. You receive a lump sum and pay back a percentage of daily credit card sales.
Invoice Factoring: If you have outstanding invoices, factoring companies will buy them at a discount and collect payment directly from your customers.
Equipment Financing: If you need specific equipment, equipment lenders often have more flexible credit requirements since the equipment secures the loan.
SBA Microloans: The Small Business Administration offers microloans up to $50,000 through community-based lenders who may be more flexible with credit requirements.
Tips for Getting Approved with Bad Credit
Prepare Your Documentation: Have recent bank statements, tax returns, and financial statements ready. Lenders want to see consistent revenue and positive cash flow.
Explain Your Credit Issues: Be upfront about what caused your credit problems. If they were due to circumstances beyond your control, explain that in your application.
Consider a Co-signer: Adding a co-signer with good credit can significantly improve your chances of approval and potentially lower your interest rates.
Start Small: Apply for smaller loan amounts initially. Proving you can successfully repay a smaller loan helps build a relationship with the lender.
Shop Around: Different lenders have different qualification criteria. Don't assume you'll be rejected everywhere based on one denial.
What to Watch Out For
High Interest Rates: Bad credit loans typically come with higher interest rates. Make sure the loan payments fit comfortably in your budget.
Short Repayment Terms: Many alternative lenders offer shorter terms, which means higher monthly payments. Factor this into your cash flow projections.
Factor Rates vs Interest Rates: Some lenders use factor rates that can be confusing. Always calculate the total cost of the loan before signing.
Prepayment Penalties: Some lenders charge fees if you pay off the loan early. Look for lenders that don't penalize early repayment.
Building Credit for the Future
While these lenders can help you get funding now, work on improving your credit for better options later:
- Make all loan payments on time
- Pay down existing debt
- Monitor your credit reports for errors
- Keep old credit accounts open to maintain credit history
- Consider a secured credit card to rebuild payment history
Making the Right Choice
Each of these lenders serves different needs. Bluevine works well for ongoing cash flow management. Taycor Financial excels at equipment purchases. Credibly provides the fastest funding. Fora Financial accepts the lowest credit scores. National Funding offers the most transparent pricing.
Consider your specific situation, funding timeline, and repayment ability when choosing. The cheapest option isn't always the best if it doesn't meet your needs or timeline.
Getting approved for a business loan with bad credit is definitely possible. These five lenders have helped thousands of business owners access the capital they need to grow, even when traditional banks said no. Focus on demonstrating your business's strength and ability to repay, and you'll find a lender willing to work with you.