Bad Credit Business Loans

Bad Credit Business Loans: 5 Financing Options To Consider

Traditional lending providers sometimes decline loan applications presented by small business owners due to bad credit. The rationale for this is simple: borrowers with bad credit ratings are more likely to fail on a loan.

However, this doesn’t rule out the possibility of you obtaining a bad credit business loan.

To qualify for a negative credit business loan, candidates would normally require a personal credit score of 500. However, because business loan rates and conditions are determined by the qualifications you satisfy, you shouldn’t expect to receive the best terms if your credit is ruined.

If you have terrible credit, your objective should be to choose a lender that offers a loan that your credit score qualifies for, not the lender who gives the best rate or terms. Here are five lenders who can assist you in achieving your objective.

5 Financing Options for Bad Credit Business Loan

Here are some financing possibilities for company owners with fair or bad credit.

1. OnDeck

OnDeck is the top bad credit small business loan lender since it accepts credit scores as low as 600 and offers same-day funding. You can qualify for a loan if you’ve been in the company for at least a year, have a business bank account, and have $100,000 in yearly income.

You need a credit score of 600, which is lower than many lenders’ requirements. Furthermore, you can receive cash as soon as the same day after your loan is approved, and you can receive additional funds after paying off half of your loan.

Advantages of lending from OnDeck;

  • Requires minimum credit score of 600.
  • It has a fantastic customer support system.
  • Same day loan may as be a possibility.

You may take out loans ranging from $5,000 to $250,000 and lines of credit ranging from $6,000 to $100,000. Your company’s income determines the amount you may borrow.

Repayment durations for term loans range from three to 36 months, whereas a line of credit loan has a 12-month repayment period. Once you’ve returned half of the loan on a term loan, you can request new money on a term loan, and the remaining interest on your present loan will not be levied.  

Unlike most lenders, OnDeck automatically makes payments daily or weekly, based on the company information you give.

2. Credibly

Credibly provides up to $400,000 in working capital loans to businesses with credit ratings as low as 500. 

Here are a few pros of lending from Credibly;

  • It requires a credit score as low as 500.
  • It offers loans up to $400,000, and that too on the same day.
  • It has an easy application process.

Working capital loans from Credibly include payback durations ranging from 6 to 18 months, with automated daily or weekly installments. 

Credibly expresses interest using factor rates, decimal numbers rather than percentages; factor rates begin at 1.15 percent. To determine the total amount you’d repay on your loan, multiply the factor rate by the loan amount.

A one-time bank lending fee of 2.50 percent of your entire loan amount is also charged by Credibly, which is taken from your funds. You might get accepted in as little as 24 hours after submitting your application and receive your loan the same day.

3. Lendio

Lendio is a small company loan marketplace founded in 2011 and connected businesses with more than 75 different lenders to help them get the money they need. Since Lendio does not originate the loan, you will receive many offers and may choose the one that best suits your needs. 

Since you only need to have a 560 credit score and are not obligated to spend all of your cash, this is the greatest line of credit choice for small company owners with terrible credit. AND, you do not have to pay anything for the money you don’t spend.

The benefits of lending from Lendio are;

  • It has a fast application process.
  • It requires a minimum credit score of 560.
  • It consists of a wide variety of lenders.
  • You only have to pay the interest on the funds you utilize.

You can borrow against a line of credit as frequently as you like as long as you don’t go over your credit limit. You may as well borrow amounts between $1,000 and $500,000 with interest rates ranging from 8% to 24%. However, it may require a personal guarantee depending on the lender you choose.

Lines of credit take 15 minutes to apply for and are an excellent choice for firms that have been in the market for at least six months and generate $50,000 in yearly revenue. A credit score of 560 is required, and a willingness to wait up to 2 weeks for financing. The loan periods range from 1 to 2 years. 

The quantity and frequency of your payments are determined by the actual lender you select. The cheaper your payments will be, the longer you’ve been in the company and the better your credit score.

4. BlueVine

B2B business owners having a credit score of 530 or better can get invoice factoring from BlueVine for up to $5,000,000. BlueVine funding necessitates the following:

  • At least three months of experience in the field.
  • Monthly income of $10,000.

BlueVine invoice factoring possibilities range from $20,000 to $5 million in loan amounts. 

This sort of funding, also known as accounts receivable financing or invoice financing, is very useful for business owners who frequently face cash flow issues owing to unpaid bills.

Businesses who qualify might get up to 90% of the value of their outstanding invoices up in advance. Your clients would pay BlueVine for their bills, and BlueVine would take a fee and deposit the remainder in your account. The weekly fee rates at BlueVine start at 0.25 percent.

BlueVine evaluates the financial soundness of your clientele while considering your application because it receives payments from them. Rather than your credit profile, you may be accepted for funding based on your clients’ payment history

BlueVine can accept your invoice factoring application in as little as 24 hours, and you can get payments as soon as the next business day.

The pros of lending from BlueVines include;

  • You can obtain cash in as little as 12 to 24 hours.
  • Various term lengths are available to meet a variety of funding requirements.
  • A low credit score of 530 is required as a minimum.
  • Accepts borrowers who have been in business for at least six months.

5. Accion

Accion Opportunity Fund’s business loans have incredibly low beginning rates of just 5.99 percent. That isn’t nearly as low as a bank loan, but it is extremely low for an internet lender. Accion Opportunity Fund does not have strict credit criteria like the other lenders on our list. As a result, even if your credit isn’t ideal, you may be eligible for one of its loans.

Bad credit is unlikely to result in a 5.99 percent interest rate. However, engaging with a lender with low starting rates will always result in a better rate than working with a lender with high rates.

Accion Opportunity Fund provides you the best chance at competitive interest rates despite a weaker credit score.

You’ll get the following perks if you choose to lend from Accion Opportunity funds;

  • It has very low starting rates.
  • The borrower qualification process is super feasible.
  • It provides business coaching as well.
  • It has the longest repayment terms.

The initiation charge ranges from 3% to 5% of the loan amount. Prepayment is free. However, there may be extra processing or closing costs. Paying up your debt early, on the other hand, can save you money. The annual percentage rate (APR) ranges from 7% to 34%, with a starting interest rate of 5.99 percent.

Overall, Accion is a great firm for small business loans for those with bad credit. They have simple lending conditions and the longest possible repayment terms we could locate, all while charging reasonable costs.

Final Word

Small business loans can help you grow your firm, pay for payroll, buy supplies, and manage cash flow. Finding a lender with bad credit might be tough, but numerous loan choices are accessible even if you have a credit score as low as 500. Some lenders don’t even need a minimum score instead of focusing on the company’s overall health.

Regardless of which lender you selected, your less than perfect (or bad) credit score does not have to be a nuisance when it comes to taking a loan for your business. You can always find alternatives and options for bad credit business loans that might be willing to finance your business.

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