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Bad Credit Business Loans


Estimated Business Loan Term2 to 18+ Months
Rates12% to 45%*
Time in Business Required2 Months
Min Credit Score Require500
Min Monthly Deposits Required5
Min Monthly Revenues$8,000
Min Business Loan Amount$5,000
Max Business Loan Amount$1,000,000
Max Number of Negative Days3 Within a Month
*rates depend on duration of funding

Shield Funding Bad Credit Business Loans

A bad credit score can make borrowing difficult for any business owner. Even if your company has strong financials, and has been in business for more than 2 years, a bad personal credit score makes getting approved for a business loan with a bank very unlikely.

In fact, borrowing has become more difficult because of the economic fallout from COVID-19. Lending guidelines are not only stricter with banks, there has been a tightening in lending across the entire financial landscape. Many lenders just do not understand financing in a crisis so they are reluctant to lend regardless of credit history.

Shield Funding has helped countless business owners through the financial crisis of 2008, and is equally prepared to navigate the financial complexities from the Coronavirus and help get business owners the money they need when they need it most. We offer a variety of bad credit business funding options to help each business owner get a business loan that can work for their situation. If you are an existing business owner you are eligible to apply for a business loan with us no matter what your credit history looks like or the industry under which your business operates. Shield Funding will take every step to help you secure the funding you need.


Types of Bad Credit Business Loans

Short Term Business Loans

A short term business loan gives a borrower a specific amount of funding that they require for a fee that is added to the principal borrowed. The duration of the funding will be approximately 6 months to 2 years, and a payment schedule will be developed that works for the business.

Merchant Cash Advance

A merchant cash advance is a loan option if you have a business that processes credit card sales. It differs compared to bank business loans because you are not actually taking a loan, you are taking a contract to sell a percentage of credit card sales in advance of those sales. A borrower is given up front cash against future sales, and as those sales are generated a small percentage is deducted through your credit card processor until the money is paid back.

Working Capital Loans

This is another type of short term financing that offers working capital for bad credit. This type of funding is not for long term asset financing but best suited for short term operating expenses such as rent, payroll, and other every day expenses. This option has a quick turnaround with minimal paperwork.

Invoice Factoring

Invoice factoring is a another way to provide collateral for, and receive a business loan. With factoring the lender makes a purchase of invoices from the borrower’s company and then will actually collect from the client, they may even run the credit of the client in place of the borrower. You basically sell the invoice debt of a customer at a discount.


The Typical Borrower

A bad credit business loan is a business funding option for business owners that meet one of the following criteria:

  • A borrower that does not meet the requirements to receive a bank loan
  • Someone that needs a business loan that has an extremely fast turnaround
  • A borrower that needs a loan that does not require collateral
  • A person that wants a loan option with little documentation required

The different bad credit options available vary in estimated duration of the loan, rates, approval amounts and some general requirements. The main requirements are that you own your own business for at least 2 months.


What is an Average Approval

Business loan approval amounts are generally based on monthly gross revenue deposits. Typically the approval amount ranges from 60% to 80% of monthly deposits, but in some cases it can go as high as 100%. So as an example, if a business has monthly gross deposits of $100,000 the likely approval amount would range between $60,000 and $80,000, and could actually go as high as $100,000 or more depending on the type of industry and the financial status of the company.


How are the Payments Structured

Once a business receives funding, depending on the funding type, payments are structured in a daily or weekly payment schedule over the course of the payback period. The payment amounts are based on the amount and duration of funding. A daily program would be calculated based on a 5 day business week schedule not including holidays. If your business qualifies for a weekly program then you can expect a one time weekly debit over the course of the payback period.


What is the Overall Cost of Funding

The cost of these bad credit small business loans depends on the factor rate in the contract, length of time of the loan, and credit history. An example of this type of funding would be $75,000 for 9 months at a factor rate of 1.29 (29% fee on the loan amount). That would make the cost of borrowing in this scenario $21,750, so the total pay back amount on a 75k loan would be $96,750. The payments would vary depending on whether the loan comes with daily or weekly payments. Use the calculator below to see an example of total cost scenarios for borrowing and the payments that can be expected to make on a daily or weekly basis.

Potential Fees to Consider

It is important to compare lenders and the fees that they charge. Many lenders do not charge any of the following fees while other apply many of them.
  • Factor Rate: The rate that determines the cost of the funding. A 1.20 rate on a 100k loan makes the total payback $120,000. In simpler terms it is a 20% fee on the borrowed amount.
  • Origination Fee: This covers the administrative costs with processing a loan.
  • Closing Costs: Are generally a list of the fees listed here, but in some cases combined into one set of costs on a small business loan.
  • Underwriting Fee: Typical fees that a lender charges for verifying all of the data and putting the loan package together.
  • Application Fee: This is sometimes charged by lenders for processing an application to see if a borrower is eligible.
  • Processing Fee: A fee sometimes charged by lenders for processing the loan documents.
  • Late Payment Fee: Many lenders charge late payment fees when a borrower is late on their payments.
  • Pre-Payment Fee: Some lenders and financial institutions charge money when a borrower pays back a loan earlier than expected.
  • Other Fees: Many lenders have different types of fees that assist with their in-house procedures, it is important to find out exactly what fees a lender will charge to process a loan.

What Lenders Look at in a Loan Application

When analyzing an application to see if an individual is eligible for an approval lenders look at:
  • Credit History: Lenders want to know how you have managed your debt obligations over the years to determine the likelihood that you will pay your loan back.
  • Monthly Revenue: The greater the revenue the larger the approval amount.
  • Cash Flow: Lenders want to see how well you manage your cash flow. This aspect of your business will help determine if you can maintain your payment schedule as well as the health of your business.
  • NSF’s: Every time you have a check bounce or insufficient funds in your business checking account it adds to your risk as an applicant.
  • Negative Balance: Every day in a 30 day period that you have with a negative balance impacts the risk level of your application. More than 4 negative days will make it much harder to get funding.
  • Average Balance: Average balance in your business bank account. The larger the average balance the healthier the business and the accompanying application.
  • Monthly Deposits: More frequent deposits within a 30 day period can improve your loan application. Lenders like to see at least 5 to 7 deposits per month.
  • Time in Business: The longer in business the better your chance of getting favorable terms. This applies to just about every type of lender.
  • Outstanding Debt: The more debt you have the harder it is to establish a payment plan that can work with your debt service cover ratio or DSCR.

Comparing Online Lending vs. Bank Lending

Most bank business funding options are quoted with interest rates or an APR (annual percentage rate) whereas online lenders often use a factor rate. In order to be able to compare your options as a borrower it is important to understand the difference between factor rate, interest rate, and APR. Understanding the different rates can help you translate a factor rate into an APR or get a close approximation so you can then make a better educated decision on what loan is right for you. Below you will find a comparison between a traditional bank loan and a bad credit business loan.

Bad Credit Business Loan Example

Loan Type
Loan Amount:
Loan Duration:
6 Months
Factor Rate:
Weekly Payment:
Minimum Credit Score:
Minimum Time in Business:
2 Months
Minimum Annual Revenue:
Opening Fee:
Total Loan Cost:

Based on a Shield Funding Small Business Loan

Bank Business Loan Example

Loan Type
Loan Amount:
Loan Duration:
12 Months
Weekly Payment:
Minimum Credit Score:
Minimum Time in Business:
2 Years
Minimum Annual Revenue:
$100,000 (2 Years Required)
Opening Fee:
Total Loan Cost:

Based on a Wells Fargo Small Business Loan

Pros and Cons of Online Lending


  • All Credit Scores Eligible
  • Low Document Requirements
  • Only 2 Months Operating Your Business is Required
  • Minimum Revenue Requirements
  • Quick Business Funding Turnaround


  • More Expensive Compared to Bank Loans
  • Shorter Payback Periods
  • No Monthly Payment Options
  • Potentially Higher Payment Amounts

Get Approved Without Affecting Your Credit.

What to Do Before You Apply

Review Your Credit History.

Having better credit will not only improve your chances of being approved with a larger selection of reputable lenders, it will have a positive impact on the rates and terms you receive. If you do not have a credit report you can go to and get your free annual report, or go directly to Transunion, Equifax, and Experian to get updated credit reports and FICO scores.

FICO Scores

  • 300 to 579 is very poor
  • 580 to 669 is fair
  • 670 to 739 is good
  • 740 to 799 is very good
  • 800 to 850 is exceptional

FICO Scoring Model

  • Your payment history is 35 percent of your score
  • Your debt and the amounts owed is 30 percent of your score
  • The age of your credit history is 15 percent of your score
  • Credit inquiries make up 10 percent of your score
  • The types of credit and accounts make up ten percent of your score

In general, a score of 329 to 669 is considered a subprime borrower on most applications. However, it is helpful to know your lender and its particular credit requirements to know how your credit history will affect your application.

There are also two types of credit, one for your personal and one for your business. Your business credit score is generally utilized when applying for traditional types of financing and insurance. Most online lenders will consider your personal credit history even though you are applying for a business loan.

Explore Different Lenders.

It is no secret that bank lending offers the best rates and terms for business loans. So your first stop if you can wait through the application process should be a bank. If you do not have time or do not meet the requirements for a bank loan then online lenders are a reliable next option. Compare reviews, analyze rates and terms, and apply with a lender that is best for you.

Review What Lenders Consider in Applications.

Consider improving areas in your profile before you apply. Lenders do not want to see negative balances. They do want to see higher average balances, frequent deposits, and good cash flow. The better you prepare for what lenders look for the more likely you will be approved and the better rates you will receive.

Determine Amount Needed.

Determine exactly how much money you require so that you do not take on unnecessary debt expenses. Work with a business financing expert at your chosen lender to establish a business funding option that works for your business.

How to Get Business Loans with the Best Rates.

Whether it is before you apply or for your next business loan there are several steps you can take to get a business loan with the best rates and terms.

1. Improve Your Credit

This applies to business loans as well as any type of borrowing, including bank loans. Montitor your credit score and take steps every day to improve it over the long term.

2. Increase Cash Flow

Both your ability to manage cash flow as well as increasing it are very important factors in getting approved by any lender. Avoid negative balances, and improve both monthly and annual revenues. The better the cash flow and the bank statements the more confident lenders will be in your ability to make repay the loan.

3. Reduce Your Outstanding Debt.

The less debt you have the easier it is to manage any existing payments. Lenders will always look at your debt ratios to determine your ability to repay so keep debt obligations to a minimum.

Bad Credit Business Loan FAQ’s

If the co-signer is a partner it will help when determining your rate, but online lenders do not accept co-signers that have no ownership in the business.

No. Lenders can only base approval decisions off of business bank statements.

No. You can utilize the funding however it is needed.

Yes, but your time in business and the financial health of the company must be very

We are not a lead generator. When you apply with Shield Funding you only deal with on of our business loan experts and you will not be solicited by anybody on our behalf.

One of the easiest loans to get is a merchant cash advance. There is very little paperwork required and sometimes you can be funded as fast as the same day you apply.

Most online lenders do not restrict how you can spend your small business loan.

It is very difficult to get a business loan to start a business. Most online lenders require an existing business generating revenue. There are some very limited government grants out there for particular industries for startups, crowdfunding is an option, and there is always friends and family.

There are always individual considerations for every application so speak with your loan advisor about business loan consolidation.

This depends on whether it was personal or business, and how long ago the bankruptcy was filed.

A minimum of 2 months is required for bad credit business funding with Shield Funding.

It really depends on why you were declined. Below you will find common reasons for being declined for a bad credit small business loan and a potential solution.

  • If you were declined for too many NSF’s, it is recommended that you begin maintaining several months of healthy banking with no negative balances and then reapply.
  • If you were declined because of extremely bad credit, think of ways of improving your FICO score before reapplying.
  • If you were declined for defaulting on another lender it is unlikely you will get approved until that is removed from your credit so it is recommended you find creative ways to raise money such as friends and family. There are also many online platforms that allow individuals to raise money for their business such as crowdfunding or similar.
  • If you were declined because you do not have revenue, it is recommended that you wait at least until you have 2 months of steady revenue.
  • If you currently have outstanding loan balances and you are denied because of your debt ratio a good idea would be paying down some of your debt before reapplying.
  • If you were denied for a larger loan due to negative factors on your tax returns, try applying for a smaller amount that does not require tax returns.
  • Get a Co-Signer. Most business loans require an owning partner to co-sign, but adding a partner with great credit can be a way to expand business loan opportunities. Keep in mind that many lenders require a period of months to pass with a new partner added to company documentation.
  • Business Consulting. It may be a good idea to talk with someone who has experience helping small businesses grow. An organization like SCORE provides business mentoring and education for small business owners at no cost.
  • Provide Collateral. There are many small business financing opportunities that can open up if collateral is introduced into the equation. Real estate, receivables, inventory and equipment are just some forms of collateral to consider.
  • If you were denied a business loan for another reason not listed we recommend that you request the reason for denial and a potential path to getting funding in the future.

The minimum credit score is 500, but in certain circumstances even that is flexible.

Personal credit is the most important credit factor in online lending, but with larger loans both may be considered.

Most online lenders do not require collateral or good credit, so all you need is a business with revenues.

Most online lenders go up to as much as 1 million dollars that you can borrow.

Why Choose Shield Funding

  • No Collateral Required on Many Small Business Loans
  • Very Competitive Rates & Terms
  • Flexible Repayment Structure
  • AAA Rating with Business Consumer Alliance
  • No Hidden Fees or Costly Application Expenses
  • Various Bad Credit Financing Options
  • Funds Deposited In Your Bank Quickly
  • Rated Number 1 Alternative Lender


Additional Reading on Bad Credit Business Financing


The Risks of Bad Credit Business Loans

Explore the risks involved with taking a bad credit business loan.

Best Ways to Utilize Bad Credit Loans

Learn many of the different ways customers utilize this type of funding.

How Do Bad Credit Business Loans Work

Read this in-depth guide into how these business loans work.

Improve or Repair Your Credit History

Learn about repairing and building your credit.

Top Questions Before Applying for a Bad Credit Loan

The most common questions asked before taking a poor credit business loan.

Bad Credit Business Loans for Good Credit Borrower

See how bad credit business loans have advantages for people with good credit.

Can You Afford a Business Loan With Bad Credit Terms?

Learn whether or not you can afford a business loan with bad credit.

How Bad Credit Affects Loan Rates and Terms

Read about the impact poor credit can have on the business funding process.

How to Get a Business Loan With Bad Credit

Explore this step by step guide to getting business funding with bad credit.

Startup Business Loans with Bad Credit

Learn about a variety of startup business loans with bad credit.

Guarantee Your Bad Credit Loan Application is Approved

Learn the steps to take to guarantee your business loan is approved even if you have bad credit.