When it comes to running a business, access to working capital can be a decisive factor between success and failure. In the modern corporate world, opportunities can arise unexpectedly, such as the chance to acquire a competitor or a partner, enter a new market, purchase the latest technology or secure a large contract. Without the necessary funds, you may miss out on these chances.

What is a bad credit score?

A loan can provide the financial resources needed to seize these opportunities and take your business to the next level. However, for companies with poor credit (indicated by FICO as a score under 580), finding a loan can be a difficult challenge. While traditional banks may be hesitant to finance businesses with low credit scores, there are alternative lenders who specialize in supporting these types of companies. These lenders may have more flexible requirements and be willing to work with you to find a financing solution that meets your needs.

     In 2023, as a business owner, you may be hesitant to take on a loan due to concerns about debt and rising interest rates. However, securing funding can actually be a smart financial decision for your business since paying it back on time can help rebuild your credit score, so you can access better financing terms and rates in the future, which will lead you to save money over the long term. We have listed 100 business loan options for bad credit companies that you might be interested in.

100 Business Loan Options for Bad Credit

Accounts receivable financing

This type of financing allows businesses to borrow money against their unpaid invoices. The lender takes on the risk of collecting the invoices, and the borrower receives immediate cash.

Angel investors

Angel investors are high-net-worth individuals who invest in early-stage companies in exchange for equity.

Asset-based financing

This type of financing is secured by the borrower’s assets, such as inventory, equipment, or real estate.

Bridge loans

Bridge loans are short-term loans that provide immediate cash to businesses while they wait for long-term financing to come through.

Business acquisition loans

These loans provide funding for businesses looking to purchase another business.

Business expansion loans

These loans provide funding for businesses looking to grow.

Debt consolidation loans

These loans allow businesses to consolidate their debt into a single payment.

Equipment leasing

This option allows businesses to lease equipment instead of purchasing it outright, which can help conserve cash flow.

Factoring

This financing option allows businesses to sell their unpaid invoices to a third-party factoring company in exchange for immediate cash.

Friends and family loans

This type of financing involves borrowing money from friends or family members.

Government-guaranteed loans

These loans are guaranteed by the government and are often available to businesses with bad credit.

Grant funding

This type of financing provides non-repayable funding to businesses with a specific mission or purpose.

Hard money loans

These loans are secured by the borrower’s assets and are often used in real estate transactions.

Invoice factoring

Similar to factoring, this financing option allows businesses to sell their unpaid invoices to a third-party company in exchange for immediate cash.

Invoice financing

This option allows businesses to borrow against their unpaid invoices.

Line of credit

This option allows businesses to borrow money as needed up to a certain limit.

Merchant cash advance

This financing option provides cash to businesses in exchange for a percentage of their future credit card sales.

Microloans

These are small loans that provide funding to businesses that might not qualify for traditional bank loans.

Peer-to-peer lending

This type of financing allows individuals to invest in businesses in exchange for interest payments.

Personal loans

This financing option involves borrowing money from a bank or other lender using personal credit.

Purchase order financing

This type of financing allows businesses to borrow money to pay for the cost of fulfilling a purchase order.

Revenue-based financing

This option allows businesses to repay their loans based on a percentage of their revenue.

SBA loans

These loans are guaranteed by the Small Business Administration and are often available to businesses with bad credit.

Short-term loans

These loans are typically used for temporary cash flow needs.

Start-up loans

These loans provide funding to early-stage businesses.

Unsecured business loans

These loans do not require collateral and are often used by businesses with bad credit.

Community development financial institution (CDFI) loan

A loan from a financial institution that focuses on serving low-income communities.

Working capital loans

These loans provide cash to businesses to cover day-to-day expenses.

Business incubators

Incubators provide resources and funding to early-stage businesses.

Cash flow financing

This financing option is based on the borrower’s cash flow and future revenue.

CDC loans

Community Development Corporation (CDC) loans are designed to provide funding and support to businesses in underserved communities.

Collateral-based loans

These loans require the borrower to put up collateral, such as inventory or equipment, to secure the loan.

Commercial mortgage loans

These loans are used to purchase or refinance commercial real estate.

Community development loans

These loans provide funding to businesses in low-income communities.

Crowdfunding

This financing option involves raising money from a large number of people through online platforms.

Debtor-in-possession financing

This type of financing is available to businesses that are in bankruptcy or restructuring.

Export financing

This option provides funding to businesses that export goods.

Franchise financing

This financing option is designed for businesses looking to purchase a franchise.

Government grants

These are non-repayable funds provided by the government to support specific industries or initiatives.

Growth capital

This financing option provides funding to businesses looking to expand or grow.

Healthcare financing

This option provides funding to businesses in the healthcare industry.

Import financing

This option provides funding to businesses that import goods.

Installment loans

These loans are repaid in installments over a set period of time.

Inventory financing

This option provides funding to businesses to purchase inventory.

Joint venture financing

This option involves partnering with another business to share the costs and risks of a project.

Leasing

This option allows businesses to rent equipment or property instead of purchasing it outright.

Letter of credit financing

This type of financing involves a bank guaranteeing payment to a supplier on behalf of a business.

Social impact loans

They can provide funding for businesses with a social or environmental mission.

Mezzanine financing

This option provides funding to businesses that are looking to expand or grow.

Microenterprise loans

These loans provide funding to very small businesses with limited access to capital.

Minority business loans

These loans are designed to provide funding to minority-owned businesses.

Nonprofit loans

These loans are designed for nonprofit organizations and are often available at lower interest rates.

Online lending

This option involves borrowing money from online lenders, which can be a faster and more convenient process than traditional lending.

Operating capital loans

These loans provide funding for day-to-day business expenses.

Owner-occupied commercial real estate loans

These loans are used to purchase or refinance owner-occupied commercial properties.

Paycheck protection program loans

These loans were created to help small businesses during the COVID-19 pandemic.

Personal credit cards

Business owners can use their personal credit cards to fund their businesses.

Private equity

Private equity firms invest in established businesses in exchange for equity.

Purchase financing

This option provides funding to businesses to purchase assets or inventory.

Real estate financing

This option provides funding to businesses to purchase or refinance real estate.

Receivables financing

This option allows businesses to borrow money against their unpaid invoices.

Refinance loans

These loans are used to refinance existing debt at a lower interest rate.

USDA loans

They can provide funding for businesses in rural areas.

Short-term working capital loans

These loans provide funding for short-term cash flow needs.

Small business loans

These loans are designed for small businesses and are often available at lower interest rates than traditional loans.

Specialized loans

These loans are designed for businesses in specific industries or niches.

Supply chain financing

This option allows businesses to finance their supply chain.

Term loans

These loans are repaid over a set period of time and are often used for large purchases or investments.

Trade financing

This type of financing can provide financing for import/export businesses.

Traditional bank loans

These loans are provided by traditional banks and are often available at lower interest rates.

Unsecured personal loans

Business owners with bad credit may be able to obtain an unsecured personal loan, which is not tied to any collateral.

Unsecured business loans

These loans are not secured by collateral and are often available at higher interest rates than secured loans.

Venture capital

Venture capital firms invest in early-stage businesses with high growth potential.

Real estate loan

A loan specifically for purchasing or refinancing commercial property.

Accounts receivable factoring

This option involves selling unpaid invoices to a third party in exchange for immediate cash.

Land development loans

They can help businesses develop land for commercial use.

Asset-based lending

This option provides funding based on the value of a business’s assets, such as inventory or equipment.

Cash flow loans

These loans provide funding based on a business’s cash flow and revenue.

Employee stock ownership plan (ESOP) financing

A loan provided by an ESOP in order to purchase shares in the business.

Credit union loans

Credit unions may offer loans to businesses with bad credit at lower interest rates than traditional banks.

Equipment financing

his option provides funding to purchase or lease equipment.

Strategic partnership financing

A loan provided by a strategic partner in order to support a specific project or initiative.

Small Business Technology Transfer (STTR) grant

A grant offered by the government specifically for small businesses engaged in research and development in collaboration with a nonprofit research institution.

Veteran-owned business loan

A loan designed specifically for businesses owned by veterans, often with more favorable terms.

Online invoice financing

This option allows businesses to borrow money against their unpaid invoices from online lenders.

Peer-to-peer lending

This financing option involves borrowing money from individual investors through online platforms.

Purchase order financing

This option provides funding to businesses to fulfill purchase orders.

State or local grant

A grant offered by state or local government entities to businesses that meet certain criteria.

Secured business loans

These loans are secured by collateral, such as real estate or equipment.

Short-term loans

These loans provide funding for short-term cash flow needs.

Start-up loans

These loans provide funding to start-up businesses.

Unsecured loans

These loans are not secured by collateral and are often available at higher interest rates than secured loans.

Women-owned business loan

A loan designed specifically for businesses owned by women, often with more favorable terms.

Contract financing

A loan that uses contracts as collateral in order to access funds.

Minority-owned business loan

A loan designed specifically for businesses owned by minorities, often with more favorable terms.

Bridge loans

These loans provide short-term funding to bridge a financial gap.

Business credit cards

Business owners can use business credit cards to fund their businesses.

Equipment leasing

This option allows businesses to rent equipment instead of purchasing it outright.

Rural business loan

A loan designed specifically for businesses located in rural areas, often with more favorable terms.

Purchase order factoring

This option involves selling purchase orders to a third party in exchange for immediate cash.

Energy financing

It can provide funding for renewable energy projects.

Tips and Takeaways for businesses with bad credit

    It’s important for business owners to carefully consider their financing options and choose the option that best fits their needs and financial situation. While it may be more difficult to obtain financing with bad credit, there are still many options available to help businesses succeed. When choosing a financing option with a low credit score, it's essential to consider the interest rates, fees, and repayment terms. Some loan alternatives, such as merchant cash advances or factoring, can come with high fees and interest rates, while others, such as SBA loans or credit union loans, may have lower interest rates but stricter eligibility requirements.

Calculate how much debt you can afford

     It's also important for business owners to be honest about their financial situation and to have a solid business plan in place before seeking financing. Lenders will want to see that the business has a clear plan for growth and that the funds will be used for a specific purpose that will benefit the company.

How do you build business credit with a bad personal credit score?

    In addition, business owners should be aware of the potential risks of taking on debt, especially if they're already struggling financially. Taking on too much debt can lead to cash flow problems and even bankruptcy, so it's vital to carefully consider the business's ability to repay the debt before taking on any new financing.

    Overall, while obtaining a business loan with low credit may be tough, there are still many options available to help entrepreneurs succeed. With careful research and consideration, and a trusted financing partner, business owners can find the financing option that best fits their needs and sets their companies up for success.

What documents are needed to apply for a bad credit business loan?

A bad credit loan typically requires the submission of a business statement or personal or business tax returns. A copy of your business license and permit, proof of business registration and a business identification number are required for your business. Typically lenders require a business plan and copies of financial reports before approving a loan request, including a financial statement.

Prepare to bolster your application

Your lender must focus your business on areas where your business is successful. For example, when you have significant collateral available, consider extending the amount you have. Depending on the size and nature of the company, the strengths are attractive to lenders. You can also try contacting the cosigner for the loan. The loan will be refunded when it fails and the cosigner assumes the payment. It is required for borrowers to be credited with a high credit score in order to be approved.

Can I get a business loan with a 500 credit score?

Yes, small business loans are attainable even when there is bad credit. Credit scores have no effect on the financial health and profitability of your company. Some lenders require at least 500 credit scores for their customers to make a profit over a six-month period.

What is the easiest SBA loan to get approved for?

SBA Express. This term loan carries fixed or variable SBA loan rates and is the most efficient and quick SBA application process, flexible terms and less down payment requirement than traditional loans.

Can you get a loan to start a business with bad credit?

Business generally requires SBA size criteria, repayable income and business plan objectives. Many of the startups with no credit are eligible. The lender will list all the required eligibility criteria and make the loan available.

What credit score do you need for a SBA loan?

Although it is impossible for SBA loans to require a credit report, some SBA lenders may require minimum personal and company credit scores. A score of 140+ is usually required for qualifying.

How To Choose a Small Business Loan With Bad Credit

When it comes to bad credit, choosing enterprise loans is much bigger than simply finding a good rate of interest. Rather, businesses with poor credit need to seek out loans which have less stringent eligibility requirements. Take into account these aspects when considering bad credit loans.

Check your credit scores

Before applying for business loans, you're free to review your personal rating. This info will help you determine which lender to contact. For established businesses, you may want to have an audited business credit record.

Factors to help you choose a bad credit business loan

If a person's credit score is poor, there are only limited options to finding the right business finance solution for their needs. If you are searching for an approved loan provider, it is possible for you to see fewer options than you had expected. List some of the key factors you need to be considered when preparing your business financing.