BAD CREDIT BUSINESS LOANS OVERVIEW
| Estimated Business Loan Term | 2 to 18+ Months | |
| Rates | 12% to 45%* | |
| Time in Business Required | 2 Months | |
| Min Credit Score Require | 500 | |
| Min Monthly Deposits Required | 5 | |
| Min Monthly Revenues | $8,000 | |
| Min Business Loan Amount | $5,000 | |
| Max Business Loan Amount | $1,000,000 | |
| Max Number of Negative Days | 3 Within a Month | |
| *rates depend on duration of funding | ||
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.
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.
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.
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 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.
A bad credit business loan is a business funding option for business owners that meet one of the following criteria:
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.
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.
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.
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.
| Loan Type | Unsecured |
| Loan Amount: | $10,000 |
| Loan Duration: | 6 Months |
| Factor Rate: | 1.3 |
| Weekly Payment: | $523 |
| Minimum Credit Score: | 500 |
| Minimum Time in Business: | 2 Months |
| Minimum Annual Revenue: | $96,000 |
| Opening Fee: | $0 |
| Total Loan Cost: | $13,000 |
Based on a Shield Funding Small Business Loan
| Loan Type | Unsecured | |
| Loan Amount: | $10,000 | |
| Loan Duration: | 12 Months | |
| Rate: | 22.99% | |
| Weekly Payment: | $215 | |
| Minimum Credit Score: | 650+ | |
| Minimum Time in Business: | 2 Years | |
| Minimum Annual Revenue: | $100,000 (2 Years Required) | |
| Opening Fee: | $150 | |
| Total Loan Cost: | $11,365 |
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 annualcreditreport.com and get your free annual report, or go directly to Transunion, Equifax, and Experian to get updated credit reports and FICO scores.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
Explore the risks involved with taking a bad credit business loan.
Learn many of the different ways customers utilize this type of funding.
Read this in-depth guide into how these business loans work.
Learn about repairing and building your credit.
The most common questions asked before taking a poor credit business loan.
See how bad credit business loans have advantages for people with good credit.
Learn whether or not you can afford a business loan with bad credit.
Read about the impact poor credit can have on the business funding process.
Explore this step by step guide to getting business funding with bad credit.
Learn about a variety of startup business loans with bad credit.
Learn the steps to take to guarantee your business loan is approved even if you have bad credit.