BAD CREDIT BUSINESS LOAN OVERVIEW
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

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What are Bad Credit Business Loans?


A bad credit score can make borrowing difficult for any business owner. Even if your company has strong financials, applying for small business loans with bad credit can be challenging with any traditional lender. Many banks today are focused on reducing risk, therefore only borrowers with high FICO scores are being considered. Shield Funding has small business loan options for any business owner that cannot obtain traditional financing because of a poor credit score.

At Shield Funding we believe the traditional loan process is outdated. An approval for a small business loan should be based on more than just a FICO score. We have learned that a company’s financial health and recent history is just as, if not more important in the approval process. For this reason we have bad credit business loans for FICO scores as low as 500. We also offer premier funding programs for borrowers that have FICO scores above 600. There are different levels of bad credit and we have various funding options that work for individuals with all types of bad credit profiles. If you own your own business and are looking for a small business loan with bad credit we can help.



What Do I Need to Qualify?

Below is a list of the general requirements needed to get approved. Although in some cases there are many additional factors that may be considered, meeting these three requirements gives you a very high chance of having your application approved.

  • At Least 2 Months in Business
  • 500 Min. Credit Score
  • $8,000 Min. Monthly Revenue

How Do I Apply?

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at (888) 882-6117
or
Submit your online application by clicking apply below and entering a few basic details about your business.


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How Our Bad Credit Business Loans Work


Our programs vary in estimated length of time, rates, approval amounts and some basic requirements. The minimum requirement is that you own your own business for at least 2 months and you have monthly gross revenue above $8,000. We DO NOT require that you accept credit cards or that you have to switch processors if you do accept credit cards. All of the business loans for bad credit that we offer feature different rates and terms based on your application and some basic requirements.


Small Business Loans for FICO Scores of 550 to 660

Our Premier Plus bad credit business loans feature some of the best rates and terms we offer. This option is for small business owners that have credit scores as high as 660 and need financing amounts ranging as high as 1 million dollars with payback periods ranging up to 18 months. This option is great for business owners that have reasonable credit and are looking for the largest loan amount with more than a year to pay back the loan.


PREMIER PLUS BAD CREDIT BUSINESS LOANS

Estimated Business Loan Term9 to 18 Months
Rates12% to 25%*
Time in Business Required2 to 6 Years
Minimum Credit Score Require550 to 660
Minimum Monthly Deposits Required5 to 7
Minimum Monthly Revenues$10,000 to $15,000
Minimum Business Loan amount$15,000 to $25,000
Maximum Business Loan amount$1,000,000
Maximum Number of Negative DaysUp to 3 Within a Month
*Rates and fees depend on the duration of funding.
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Small Business Loans for FICO Scores of 550 and Above

Our Premier bad credit business loans are a better option for business owners that have more than a year in business and do not have really poor credit. The Premier program has a business loan duration as long as 1 year with a maximum loan amount of up to $250,000. This loan program is great for companies looking for a larger financing option with at least a year to pay back the loan.


PREMIER BAD CREDIT BUSINESS LOANS

Estimated Business Loan Term6 to 12 Months
Rates12% to 32%*
Time in Business Required1 Year
Minimum Credit Score Require525
Minimum Monthly Deposits Required2 to 5
Minimum Monthly Revenues$10,000
Minimum Business Loan amount$5,000
Maximum Business Loan amount$250,000
Maximum Number of Negative DaysUp to 3 Within a Month
*Rates and fees depend on the duration of funding.
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Small Business Loans for FICO Scores Above 500

Our Standard business loans are a better option than our Starter program because the loan duration can go as high as 10 months. This option is for small business owners that have credit scores above 500 but want a slightly longer term payback period for their loan. It also features high approval amounts ranging up to $150,000. This type of bad credit business loan is great for companies looking to make substantial short term investments into expanding the business and cannot obtain traditional financing because of a poor credit history.


STANDARD BAD CREDIT BUSINESS LOANS

Estimated Business Loan Term6 to 10 Months
Rates12% to 45%*
Time in Business Required6 Months
Minimum Credit Score Require500
Minimum Monthly Deposits Required5 to 7
Minimum Monthly Revenues$10,000
Minimum Business Loan amount$5,000
Maximum Business Loan amount$150,000
Maximum Number of Negative DaysUp to 4 Within a Month
*Rates and fees depend on the duration of funding.
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Small Business Loans for FICO Scores 500 and Above (Only 2 Months in Business)

Our Starter bad credit business loans are a great option for borrowers with really bad credit and only in business for a few months. This program has a maximum loan value of $20,000 and a maximum duration of 5 months, but can be a really good option for borrowers that cannot obtain financing through any other resource and need fast cash. They are a great financing option for small expansions or marketing initiatives for companies trying to grow their business.


STARTER PLUS BAD CREDIT BUSINESS LOANS

Estimated Business Loan Term2 to 5 Months
Rates12% to 45%*
Time in Business Required2 Months
Minimum Credit Score Require500
Minimum Monthly Deposits Required5 to 7
Minimum Monthly Revenues$8,000
Minimum Business Loan amount$5,000
Maximum Business Loan amount$20,000
Maximum Number of Negative DaysUp to 4 Within a Month
*Rates and fees depend on the duration of funding.
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How Much Do I Qualify For?

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 we can go as high as 100%. So as an example, if you have monthly gross deposits of $100,000 your likely approval amount would range between $60,000 and $80,000, and could actually go as high as $100,000 depending on the type of industry.

How Does Paying Back The Bad Credit Business Loan Work?

Once your business receives funding, either via wire transfer or ACH deposit your business can expect a daily debit of an agreed upon amount over the course of the payback period. Our 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 for an agreed upon amount over the course of the payback period.

What Will Bad Credit Business Loans Cost You?

The cost of our bad credit small business loans depends on your factor rate, length of time you have the loan, and your credit history. An example of this type of loan package would be a loan of $75,000 for 9 months at a factor rate of 1.29. That would make the cost of borrowing in this scenario $21,750, so your total pay back amount on a 75k loan would be $96,750. Your payments would vary depending on whether you have daily or weekly payments, the monthly option would not be available for bad credit borrowers. Use the calculator below to give you an example of total cost scenarios for borrowing and the payments you can expect to make on a daily or weekly basis.



Bad Credit Business Loan Calculator

  • Daily
  • Weekly
  • Monthly
Outputs
LOAN AMOUNT
FACTOR RATE (written as a % to keep things simple)
NUMBER OF MONTHS
Total Repayment
Payment
$156,000
Cost of Loan
$4,444.44
Total Repayment
$4,444.44


Potential Fees to Consider



What Documents are Needed to Apply?


Documents Required for Less Than $100,000

  • Drivers License
  • Bank Statements
  • Proof of Ownership
  • Property Lease Agreement
  • Business Licenses
  • Voided Check

Additional Documents for Loans More Than $100,000

  • Personal Tax Returns
  • Business Tax Returns
  • Profit & Loss Statement
  • Balance Sheet
  • Business Debt Schedule (possible)
  • Potential for Others


Checklist of Common Factors That Impact Your Loan Application

Before you apply it is a good idea to learn about some of the most important factors we consider when looking at an application for funding. Although we feature many business financing options and often approve applicants in the 500 FICO score range, it is important to emphasize the need for borrowers to improve their credit history if at all possible before applying. The better your credit history the more likely you will be approved with better rates and terms. However, we also understand that time is of the essence which is why we offer business loans for all ranges of bad credit for borrowers who cannot improve their credit. In addition to credit history, we also look at time in business, positive and negative banking data, cash flow, and several other important factors. Please keep in mind that one borrower with a 500 fico score but healthy bank statements can get better terms than a borrower with a 600 fico with weaker bank statements, ie. NSF’s, negative days, lower balances etc. Here are some of the important pieces of information we consider:


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Are Bad Credit Business Loans Right For You?


Our small business loans for bad credit borrowers are a great option if you are experiencing credit problems or you simply do not qualify for traditional options. There are so many reasons why an individual’s credit score can take a dip, but the ebbs and flows of your FICO score does not change the quality or the financial needs of your company. In order to keep your company operating and growing you need access to capital and we understand that. Our bad credit options do come at a premium to traditional bank loans, but the funding process is very fast, there are no FICO disqualifications, and we have various options so there is a very good chance that one can work for you.



Advantages vs. Disadvantages


Advantages

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

Disadvantages

  • More Expensive Compared to Traditional Loans
  • Shorter Payback Periods
  • No Monthly Payment Options
  • Personal Guarantee Needed


What are the Risks in Taking on More Debt?


There are always risk when taking on more debt, but there are some that standout and should be considered before applying.

It is important to consider these risks in your calculations and to discuss with your partner, accountant, or financial advisor.



Why a Bad Credit Business Loan Can Be a Good Business Decision

Bad credit not only affects you personally, it can have a profound impact on your business. There is a lot of research to support that one of the most common reasons small businesses fail is because of a lack of funding. According to data on small business failures, a large number of small businesses close their doors solely because they run out of money. There are many good businesses that are managed well and have great potential, and are even likely to succeed, but they simply run into cash flow problems.

It is not just running out of money or some sort of financial issue, a small business loan at the right time can be advantageous even if the cost are higher. Many lower cost loans take weeks or months to get approved, but in the business world opportunities do not wait. A bad credit business loan is fast and it can be a great decision depending on the circumstances as long as the borrower has analyzed the risk and reward, and completely understands the true cost of financing.



Common Uses for Small Business Loans Bad Credit


Bad Credit financing allows business owners to build their business despite having bad credit and being denied access to traditional financing. Below are some examples of how high risk borrowers are utilizing their funding.


Tax Liens

Many small business owners with bad credit have tax liens in their credit profile. Having this type of negative history not only prevents you from getting credit at favorable terms, but it may actually impede you from getting financing altogether, or possibly even halt your ability to operate your business. However, Shield Funding has worked with small business owners in this situation, and have helped them secure financing to pay off their tax liens.

Back Rent

During slow business cycles or seasonal downturns many small business owners fall behind on their rent. Having bad credit makes getting funding in this type of situation difficult. For reasons like this many business owners have applied and received funding through our company and were able to avoid eviction.

Consolidate Debt

Many borrowers with bad credit go to the first lender that will approve them often leading to unfavorable terms. On top of that, many borrowers take a second loan which only compounds the problem. Shield funding has often consolidated these loans into one loan with favorable terms.

Unexpected Circumstances

In the business world unexpected events are a normal occurrence. Broken down company vehicles, faulty machinery, or some other type of unexpected circumstance can have a business in a tight crunch for capital. A small business loan can be a great way to resolve any type of unexpected cost.


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What is Bad Credit?


The term bad credit is generally assigned to an individual that has a particular FICO Score or VantageScore that falls within a certain range. Both VanatageScore and FICO have various scoring models, but for simplicity we are going to discuss the Base FICO SCORE that ranges between 300 and 850 and is compiled based on several factors in an individual’s personal credit profile.

FICO Scores

  • 800 to 850 is exceptional
  • 740 to 799 is very good
  • 670 to 739 is good
  • 580 to 669 is fair credit but below average
  • 300 to 579 is poor credit and well below average

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

It is important to note that the category of bad credit can differ depending on the loan being considered and the lender providing that loan. As an example, the credit requirements on a bank loan are going to be quite different than a car loan or credit card. For this reason bad credit on one application may be acceptable credit on another loan application, especially when there are other things being considered such as business revenue, time in business, monthly deposits, etc. Know your lender and their credit requirements to get a better understanding of your credit standing.

There are also two types of credit, one for your personal and one for your business. Your business credit score cane be found at Experian, Equifax, or Dunn & Bradstreet and usually ranges from zero to 100. Business credit is generally utilized when applying for traditional types of financing and insurance. Both your personal and business credit scores can influence how much credit you get and the rates and terms you receive on that credit.


Why Would We Fund You If You Have Bad Credit?

This is a great question that many people ask when considering a bad credit business loan. There are several reasons why we approve low or no credit borrowers.

First and most importantly it is because we do not believe that credit histories accurately depict the likelihood that a borrower will pay back a business loan. Most negative credit items stay on a report for seven years or more, and it is more than likely that the borrower’s entire credit profile and ability to pay back a loan have changed significantly, even if the actual report does not reflect those changes.

Second, negative items in a credit report might not tell the whole story and is a limited way of analyzing a loan application. There are myriad reasons that a small business owner can develop poor credit, and some of those reasons are justified in a successful long term strategy. It is well known that small businesses in the early stages of growth often run into cash flow problems. Some bills have a higher priority than others when it comes to maintaining your business, and when a young business is struggling it is very likely that lower priority bills are shelved until better times. This can result in a strike on a credit report but allows a business owner the opportunity to keep building the business. This type of juggling between creditors is a common occurrence in business and can be considered good business management, even if it results in a lower credit rating. This example extends to so many types of circumstances and highlights how credit scores are not necessarily a good way to judge a borrower’s ability to repay a loan.

Lastly, we structure our bad credit business loan programs different than banks. We calcualate our loan approval amounts considering a company’s overall financial strength and not solely an owner’s credit history. Financial health of a company might include something like recent reviews online or a change in cash flow patterns. Our experience after more than a decade in business funding gives us the ability to understand how companies perform best. We know what payment structures will help both the company grow and at the same time allow it the financial flexibility to pay back the borrowed funds. We have a modern approach to understanding borrowers, companies, and financial risk.

Why Traditional Lenders Do Not Lend

There are some justifiable reasons as to why banks are not providing small business owners with access to capital. At the top of the list is that borrowers in this country are still struggling with their credit. The picture is slightly better than a decade ago when the nation was coming out of the financial crisis, but according to FICO the average score of Americans is still less than 700, a score that is still below what you will need to get traditional financing. In conjunction with the bad credit problem, banks are under much stricter lending guidelines as a result of the financial collapse of 2008. So banks having to demonstrate documented support for their approvals are understandably limited in their ability to approve a borrower with the current credit histories of most borrowers. This is just part of the reasoning for the tightness in traditional lending and if you want to learn more about why banks do not like to lend to small businesses here is a study on the topic.

It is a well known fact that the lack of access to capital is directly tied to lower credit scores. This lack of access can affect different companies in various ways. Some companies are structured where there is a significant gap between when they complete a project to when they receive payment. Not having the additional funding cushion to deal with these gaps can easily result in a closed business. Other companies, because of a strained cash flow reduce their budget for inventory and staff which results in subpar products or services; a result that ultimately drains the life out of a business. According to the Small Business Committee, many small businesses continue to face obstacles to financing even though there are many signs that the economy has recovered. There is plenty of historical data to support why so many of America’s small businesses are failing because of a lack of access to capital and here is a detailed infographic that highlights some statistical data on small business failures in this country and its relation to a lack of business financing.



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Our Belief

We believe that good companies that are well managed and have great potential should not have to close their doors because of bad credit or the resulting cash flow issues that stem from it. Our historical lending data has shown that many small business owners that have received a bad credit business loan have not only continued to do great business, but have gone on to build successful companies. For these reasons small business loans should be made available to business owners that have bad credit or just do not meet traditional financing standards.

We take pride in providing as many funding opportunities as possible to small business owners. We believe that companies that have great potential and are well managed should have an opportunity to succeed regardless of the credit rating of a business owner. We have a wide variety of bad credit small business loan programs and a very flexible approval process, and we will take every step to see that your business gets the money it needs in a timely manner with the best rates and terms. We look forward to working with you.


Why Choose Us

  • No Collateral Required on Many Small Business Loans
  • The Most Competitive Rates
  • 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

Review Steps to Get a Bad Credit Business Loan

Step 1. Gather Documents

At Shield Funding you really only need your driver’s license, copy of at least 2 months bank statements (6 months if available), and a copy of your business ownership.

Step 2. Submit Application

You can submit your application online or over the telephone.

Step 3. Review Loan Options

We will go over your requests for funding and put together a few different options so that you can determine which works best for you.

Step 4. Receive Funding

Once we have your documents you can receive a bank wire in as quickly as the same day.


Bad Credit Business Loan FAQ’s




What To Do If You Are Denied?

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.

  1. If you were declined for too many NSF’s, we recommend maintaining months of healthy banking with no negative balances and then reapplying.
  2. If you were declined of bad credit, think of ways of improving your FICO before reapplying. There are many instances where a potential borrower has negative data on their report that is outdated or there erroneously and can be removed with a phone cal. Go to annualcreditreport.com and get your free credit report and then dispute any faulty data to get started.
  3. If you were declined for defaulting on another lender it is unlikely you will get approved until that uis removed from your credit so we would recommend creative ways to raise money such as friends and family or potentially selling equity in your company. There are also many online platforms that allow individuals to raise money for their business such as crowd funding or similar.
  4. If you were declined because you do not have revenue, we would recommend that you wait at least until you have 2 months of steady revenue.
  5. If you currently have outstanding loan balances and you are denied because of your debt ration we recommend paying down some of your debt before reapplying.
  6. 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.
  7. If you were denied for another reason not listed we recommend that you request the reason for denial and a potential path to getting funding in the future.

Additional Bad Credit Business Financing Options

Merchant Cash Advance

A merchant cash advance is a great funding option if you have bad credit and you have a business that is already operating and generating revenue. It differs compared to traditional business financing because you are not actually taking a loan, but selling a set amount of anticipated sales in advance of those sales. A borrower is given a lump sum of cash in advance of future sales, and as those sales are generated a small percentage is deducted until the lump sum and any fees is paid back.

The contract amount is determined upfront so the borrower knows exactly what borrowing will cost. The payment process is seamless because the business owners does not have to write checks or pay attention to dates so there are no missed or late payments, no folders kept, it is all done electronically so there is very effort. For a bad credit borrower an MCA can be a good way to raise capital for their business because your credit history is a small factor in the approval process, the actual funding can happen in as fast as a day, and the payment process requires minimal effort.

Startup Bad Credit Business Loan

Unfortunately we do not have a program that provides small business loans to entrepreneurs who do not have an established company with at least some revenue. This does not mean that funding for your company is not possible. In fact there are many web based lenders that have options for these stages of financing and you can get started be exploring some of the options through the SBA. There is also a microloan program for entrepreneurs that have bad credit but want to start a business.

Small Business Grants with Bad Credit

Although a large portion of the web and other publications discuss options for grants there are very few actual grants available for small business owners or entrepreneurs with bad credit. You can read more on this topic and see if you are eligible for a business grant with this SBA Resource.