Business Loans for Bad Credit
/Qualifying for a business loan from either a credit union or bank when you have a poor credit score can be tough. This happens because potential borrowers are considered to have a higher risk than those with higher credit scores and banks don’t want to take that responsibility. There are a lot of systemic reasons (due to the country’s legacy of racism and sexism) for why some folks have a poor credit score, and thankfully there are changes being made to address these economic injustices.
However, these changes will take time. In the meantime, if you have poor credit and are seeking a business loan there are still options available to you. This is where online lenders can come in to save the day. People who have a low credit score but are still in need of a business loan can apply and be accepted by those alternative entities. It’s worth mentioning that FICO considers a credit score to be “bad” if it’s between 300 and 629. So, if you find yourself within this range and you’re looking for an advantageous business loan, this article may help you.
Below are reviews of online lenders that offer business loans for bad credit.
Note from Money & Mimosas: This article is for informational purposes only. It is not an endorsement of any of these lenders by Money & Mimosas. When choosing a business loan, we believe that an APR above 15% for a business loan is very high. Be sure to think deeply and consult others before deciding to accept a loan that has a high APR.
Fundbox
The online lender known as Fundbox is an alternative lender that can offer business loans for those with bad credit. This online lender has a very intuitive website that aims to provide loans easily and quickly to people in need.
In order to apply for a business loan from Fundbox, you will first have to fill out an application form directly on the official website. You will have to pick between a one-time term loan and a revolving line of credit. The repayment terms can be chosen too and the two options are either between 12 and 24 weeks or between 24 and 52 weeks.
Keep in mind that the online lender will also ask you to provide some important personal information as well as business information. A very important detail to consider is that, unlike most lenders, Fundbox doesn’t ask for a full business plan before accepting you for a loan.
Besides that, you will be asked to provide your business’ banking details as well so they can transfer the funds and take the payments according to the repayment schedule. In fact, this is the only condition that Fundbox asks of its clients.
The minimum required credit score at Fundbox is 600 and the estimated APR ranges between 10.10% and 79.80%. The maximum amount that you can take out from them is $150,000. There are no extra fees to be paid and the funds are sent to you the next business day after the application. You need at least six months in business in order to be eligible too. Last but not least, your credit score will not be affected in any way during the application process because the lender only does a soft credit check before accepting you.
BlueVine
BlueVine is another online lender that offers the possibility to obtain a business loan even if you have a bad credit score. The application process is extremely fast and it’s usually completed within a few minutes, straight from their website. Keep in mind that the lender will perform a soft credit pull before analyzing your application but this won’t affect your credit score.
You will need to offer answers to a few basic questions, provide some personal and business information, and read the fine print carefully. Once that is done, you will be asked to connect your bank account so that the funds get transferred in a matter of hours. This step is also for BlueVine to take out the payments according to your payment schedule.
BlueVine has a minimum required credit score of 600, and an estimated APR that ranges between 15.00% and 78.00%. The funds reach your account within a maximum of 24 hours after your application has been accepted. Your business needs at least six months in business to be eligible.
It’s worth mentioning that in the case of invoice factoring, you will be able to borrow as much as $5 million. The term length for this one is between 1 and 13 weeks. If you choose a line of credit, you will be allowed to borrow a maximum of $250,000. The term length for it is between 6 and 12 months.
OnDeck
Things also work similarly in the case of the online lender called OnDeck. This one offers lines of credit and term loans, with a loan term between 3 and 36 months. The estimated APR for this lender varies between 11.00% and 61.90%. The application process is incredibly easy and works in a similar manner as the aforementioned ones. In fact, applying for a business loan from them can even be done from a mobile device in just a few minutes.
The minimum required credit score for a business loan from them is 600, with a minimum of one year in business. In the case of a term loan, you can borrow up to $250,000. In the case of a line of credit, you can borrow up to $100,000.
Funding is super fast too, with the funds reaching your account within 24 hours of the accepted application. OnDeck helps small businesses with bad credit obtain a loan but it won’t work in the case of a startup. That’s because of the one-year in business requirement. The lender also requires a personal guarantee and a business lien for its loans.
Summary
As you can see, there are options if you have a bad credit score but still need a business loan fast. As with any other type of loan, there are advantages and disadvantages but the key is to know exactly what you want and thoroughly analyze your options. Remember that even soft credit pulls will eventually affect your credit score if you are undecided and look at too many lenders. This is why it’s so important to do some research and only apply to those online lenders that you know for sure will accept you for a business loan, even with a bad credit score.
