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


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 bank or traditional lenders. Many banks today are focused on reducing risk, only borrowers with high FICO scores and impressive financials are being considered. The reality is that most traditional lenders do not offer bad credit business funding options and the main financing resource for borrowers with less than stellar credit is an alternative lender. Shield Funding is a leader in the alternative lending industry and offers a variety of small business loan options for any business owner that cannot obtain traditional financing because of a poor credit score.

Shield Funding believes the traditional loan process is outdated. An approval for a small business loan should be based on more than just a FICO score. Shield Funding has learned that a company’s financial health and recent history is just as, if not more important in the approval process. For this reason the company offers bad credit business loans for FICO scores as low as 500. Shield Funding also understands that there are different levels of bad credit so the company offers various funding options that work for individuals with all types of bad credit profiles.

What Do I Need to Qualify?

Below is a list of the requirements needed to get approved for funding with our most basic program. 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
Submit your online application by clicking apply below and entering a few basic details about your business.


How Do Bad Credit Business Loans Work

A bad credit business loan is a business financing option for small business owners that do not meet the requirements of traditional lenders such as local and regional banks. The different bad credit programs available vary in estimated length of time, rates, approval amounts and some general 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. There are different levels of bad credit and several types of financing options depending on the particular details of an application.

Small Business Loans for FICO Scores of 550 and Above

The Premier bad credit business loans feature some of the best rates and terms offered and are for businesses operating for more than 6 months. This type of funding is for business owners that have credit scores above 550 and need financing amounts ranging from a few thousand dollars to as high as 1 million dollars with payback periods ranging up to 18 months or more. This option is great for business owners that are at the higher end of poor credit and are looking for the largest loan amount with more than a year to pay back the loan.


Estimated Business Loan Term 9 to 18+ Months
Rates 12% to 25%*
Time in Business Required 6 Months
Minimum Credit Score Require 550
Minimum Monthly Deposits Required 5 to 7
Minimum Monthly Revenues $10,000
Minimum Business Loan amount $15,000
Maximum Business Loan amount $1,000,000
Maximum Number of Negative Days Up to 3 Within a Month
*Rates and fees depend on the duration of funding.

Small Business Loans for FICO Scores of 500

The Starter bad credit business loans are a great option for borrowers with really bad credit and only in business for a few months. This type of funding has a maximum loan value of $50,000 and a maximum duration of 9 months, but can be a really good option for borrowers that cannot obtain financing through any other resource and need fast cash for their business. The credit score requirement is approximately 500 but there are certain borrowers that can get a bad credit business loan with a credit score below 500 depending on the health of the business. This is a great financing option for small expansions or marketing initiatives for companies trying to grow their business.


Estimated Business Loan Term 2 to 9 Months
Rates 12% to 45%*
Time in Business Required 2 Months
Minimum Credit Score Require 500
Minimum Monthly Deposits Required 5 to 7
Minimum Monthly Revenues $8,000
Minimum Business Loan amount $5,000
Maximum Business Loan amount $50,000
Maximum Number of Negative Days Up to 4 Within a Month
*Rates and fees depend on the duration of funding.

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 or more depending on the type of industry and the health of the company.

How Does Paying Back The Bad Credit Business Loan Work?

Once your business receives funding from any of the programs, 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. 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 for an agreed upon amount over the course of the payback period.

What Will Bad Credit Business Loans Cost You?

The cost of bad credit small business loans depends on the factor rate, length of time of the loan, and 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 (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, the monthly option on some funding programs would not be available for bad credit borrowers. 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.

Bad Credit Business Loan Calculator

  • Daily
  • Weekly
  • Monthly
FACTOR RATE (written as a % to keep things simple)
Total Repayment
Cost of Loan
Total Repayment

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

When analyzing an application to see if an individual is eligible for an approval lenders look at credit history, 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 business bank financials can get better terms than a borrower with a 600 FICO with weaker bank financials such as NSF’s or more negative balances in the business bank account, lower balances etc. Lenders take a holistic approach to determining eligibility along with rates and terms and here are some of the important elements of an application that is considered:

Get Your Bad Credit Business Loan From a Trusted Source.

Apply Now

Are Bad Credit Business Loans Right For You?

Small business loans for bad credit borrowers can be a great option for business owners experiencing credit problems or for those who simply do not qualify for traditional loans. Shield Funding believes that borrowers should be educated and only take a business loan if it is right for that small business owner and will lead to business growth and success. The two most popular options for small business owners seeking financing are alternative online lenders or traditional financial institutions such as banks or close equivalents.

While many consumers in the past were unfamiliar with online lending, there has been tremendous growth recently in this type of borrowing and it is not simply because more people are doing business online. According to the most recent Small Business Credit Survey or SBCS by the Federal Reserve, applications to online lenders in 2018 were up from 24% to 32% and this upward trend has been continuing for years as it was at 19% in 2016. These borrowers reported that they favored improved approval chances, fast credit decisions, and no collateral requirements. Overall net borrower satisfaction slipped slightly to 33%. The main complaint with online lenders was the higher rates charged when compared to banks, however, when you consider the speed of receiving funding and the lack of collateral needed the higher rates do make sense.

Comparing Alternative Lending and Traditional Options

Most traditional business funding options are quoted with interest rates or an APR (annual percentage rate) rate whereas alternative lenders may often use factor rate. In order to be able to compare your options as a borrower of small business loans it is important to understand the difference between factor rate, interest rate, and APR.

In general, APR is utilized on most loan products used in many aspects of daily life. In order to keep the explanation of APR simple, the incremental effects that compounding has on APR will not be discussed. APR takes the interest paid on the principal as well as all other fees and translates it into an easy to read number. As an example, if a customer borrows 10K for one year with an interest rate of 10%, and that same customer paid back 11K (principal + interest) at the end of the year with no other fees added, you would have an APR of 10%. Any additional fees on top of the 11,000 paid back would drive up the APR. Most financial products are advertised with an APR so it is easy to see how a borrower might get confused when looking at a small business loan offered by an alternative lender.

Factor rate on the other hand is limited in its use and generally applies to alternative lending products. Most people are not familiar with the term and it is quoted with a decimal and is considered a fee. For example, a factor rate of 1.2 translates to a 20% fee. One important point is this 20% is not quoted on an annual basis like interest rates or APR but for the life of the loan which can be less than one year. It also does not account for additional fees like APR does in its calculations. What this means is that the 20% with a 1.2 factor rate, if translated into APR, can be 40% to 50% or more depending on the payback time period and if there are other fees on top of the rate costs.

As an example to highlight the difference between factor rate and APR, an average $10,000 small business loan with an online lender that has a payback period of six-months will costs $1,300 in fees for the average borrower based on credit history and business financials. Although this may appear to be a loan with a 13% APR, because it is only 6 months you would actually have to double this number to get the actual APR based on an entire year making this loan cost $2,600 or a 26% APR. Any additional fees would drive up the APR even more. Knowing the APR on two financial products allows you to compare how expensive each loan will be.

Interest rate is also a popular calculation method, typically quoted on an annual basis, and is basically the cost to borrow money without any additional fees or administrative costs. When you bundle any extra fees on top of the interest costs to borrow you get your 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 an alternative bad credit business loan.

Bad Credit Business Loan

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 Shield Funding Small Business Loan

Bank Business Loans

Total Loan Cost:

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:

Based on Wells Fargo Small Business Loan

Pros and Cons of a Bad Credit Business Loan vs. Bank Business Loan


  • 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 Traditional Loans
  • Shorter Payback Periods
  • No Monthly Payment Options
  • Higher Payment Amounts

What are the Risks in Taking on More Debt?

There are always risks 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 understand if you can afford a bad credit business loan which is why we recommend that you discuss all major financial decisions 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 Bad Credit Small Business Loans

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 has helped them secure business loans with to pay 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 business funding in this type of situation difficult. For reasons like this many business owners have applied and received loans through Shield Funding 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 business loan which only compounds the problem. Shield Funding has often consolidated small business 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.

Get Approved Without Affecting Your Credit.

Get Started

What to Do Before You Apply

Determine Amount Needed. Before you apply for any business loan it is a good idea to determine exactly how much money you require. It is important to know how much money you need to borrow so that you do not take on unnecessary debt expenses. Go over the details of your intended business plan to utilize the funding this way you know exactly how much you need to borrow.

Determine Type of Funding. Decide what type of funding you need. Today there are so many business financing options available it is important to understand them and decide which is best for you. Perhaps you are looking for a business line of credit so that you only draw capital as you need it. You may also want a working capital loan so that you have immediate access to the full amount of capital. Having bad credit may play a part in which options are available to you but before applying it is a good idea to look at a wide variety of small business loans no matter what your credit looks like.

Explore Different Lenders. Decide which type of lender is best for you. Alternative lenders or private lenders which make up most of the lenders you can find online should certainly be explored. These lenders offer fast business funding options with very little credit requirements. The main factor to consider with alternative lenders is the cost of financing. It can be significantly more than traditional financing which is why that banks and other lower cost lenders must be considered before you apply for alternative financing.

Although banks and similar traditional sources of financing have some pretty stringent requirements, they feature some of the lowest costs on borrowing money for your business. Most banks, besides the requirement of a good credit score that is most likely north of 700, will require that your company has several years in business and the borrower has a prior working relationship with the bank. Although there is a significantly more difficult approval process when compared to alternative lending, a borrower should at least talk with the bank they do business with to see if they may qualify.

When exploring lenders it is important to get a good idea about the reputation of that lender. Do a thorough check on the lender’s online reviews in places like Trustpilot and Yelp. Make sure the lender is a trusted financial company. Lastly, it is always a good idea to confirm that you are applying directly to one source and that your information will not be shared with any other lenders. Doing your due diligence on any lender you are considering working with is always a good idea and will improve your chances of having a successful borrowing experience.

Review Your Credit History. In conjunction with exploring lenders and the different financing options available it is a great idea to have a look at your credit score and improve your credit if you can. 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. Once you have your report you can remove any outdated negative records and with some negotiation and a pay for delete letter you may be able to get rid of the bulk of legitimate claims against you. Understanding your credit and being able to improve it where necessary is a critical step that should be taken before you apply for a business loan.

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

  • 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. Approximately 40% of the country falls into this category based on recent statistics from Experian. 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. 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 can 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 of an approval amount you get and the rates and terms you receive on a loan. The lower your FICO score the more likely you will have higher APR’s and fees on your loans.

Why Would a Lender Fund You If You Have Bad Credit?

This is a great question that many people ask when considering a bad credit business loan. The main reason today that lenders provide business funding for bad credit is because of a new way of underwriting loans. Lenders today 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. Also, technology today allows lenders to have instant access to data about an individual and the underlying business that is not included in a credit report. This additional information combined with new underwriting models contributes to a more flexible approval process.

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. The following insight is no reason to avoid applying to traditional lenders, but it is meant to provide an explanation as to why there are lower approval rates with traditional lenders when compared to private lenders. 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 CreditKarma the average score of Americans is still about 700, a score that is most likely below what you will need to get traditional financing. Also, in conjunction with the bad credit problem, banks are under much stricter lending guidelines as a result of the financial collapse of 2008. Banks have to demonstrate documented support for their approvals which is why they adhere to the 5 C’s of credit to determine creditworthiness for business financing. Besides the paperwork required when analyzing the 5 C’s, they require at least 2 years of business financials, both business and personal tax returns, a resume, business plan and use of the loan statement, and several other documents to ensure that you are a suitable borrower. The increased document requirements along with lower credit scores make the restricted lending understandable. The regulated environment and lower credit scores is just part of the reasoning for the tightness in traditional lending, if you want to learn more about why banks do not like to lend to small businesses here is a study on the topic.

The lack of access to capital 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. It is a well established fact that small businesses continue to face obstacles to financing even though there are many signs that the economy is booming. It is very likely that many small business owners just do not know that alternative business loan options are available to them.

Tired of Being Denied? Apply Directly to One Source.

Get Approved

Choosing Shield Funding to Secure Your Small Business Loan

Shield Funding understands 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. The company’s 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 for those that do not meet traditional financing standards.

Shield Funding has secured loans for thousands of business owners over the last decade. The company utilizes cutting edge technologies to provide a wide variety of financial products that rely on a new and modern underwriting model. Shield Funding promises to provide clients with the highest level of customer service and take every step to see that your business gets the money it needs in a timely manner with the best rates and terms available.

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

Review Steps to Get a Bad Credit Business Loan

Step 1. Critical Early Research

Determine how much money you require, analyze different lenders, and take a good look at your credit.

Step 2. Gather Initial Documents

To apply at most online lenders you 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 documents.

Step 3. Submit Application

With most online lenders you can submit your application online or discuss options over the telephone.

Step 4. Review Loan Options

Go over a few different small business loan options so that you can determine which works best for you.

Step 5. Receive Funding

Once all of your documents are signed and submitted you can receive a bank wire in as quickly as the same day with online lenders.

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, it is recommended that you begin maintaining several months of healthy banking with no negative balances and then reapply.
  2. If you were declined because of extremely 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 erroneous and can be removed with a phone call. Go to annualcreditreport.com and get your free credit report and then dispute any faulty data to get started. This may also help you improve your chances in the future of acquiring a traditional small business loan with much more favorable rates and terms.
  3. 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.
  4. 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.
  5. 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.
  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. 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.
  8. 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.
  9. 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.
  10. 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.

Popular Bad Credit Small Business Loans Options

Shield Funding looked at five years of small business loan products offered by the top 10 alternative lenders by loan volume to determine the most utilized types of bad credit small business loans made available to subprime borrowers. This in-depth review of statistical data along with more than a decade of experience contributed to the following comprehensive list of bad credit small business loans available in 2020.

Alternative Business Loans

Alternative lenders or online lenders are a great option if you need immediate funds for your business and you have bad credit. Most of these lenders do not require collateral, and some even offer no credit check business loans. However, in almost every case a soft credit pull or hard credit pull is required. Many alternative lenders offer bad credit business loans for business owners with scores as low as 500 and some even provide business loans for less than a 500 credit score. If you have poor credit or have recently been denied a business loan from a bank, go online and visit a few lenders and see what types of small business loans are available for you.

Asset Based Loans

A type of commercial lending that is generally reserved for larger loan amounts and well suited for large manufacturers or service companies that want to use their receivables or inventory. These loans usually come in the form of a business line of credit but some lenders may structure it as a term business loan. Typical rates are approximately 7-20% APR and you can usually leverage about 80% of receivables or about 50% of eligible inventory. The good thing about this type of funding when you have poor credit is that this type of loan is more about the underlying assets and less about credit. In the case of receivables it is about the customer’s credit and not the applicant.


Factoring is simply a subset of asset based lending or just another way to provide collateral for a business loan. The main difference is how the lender structures the funding. With factoring the lender makes a purchase of invoices from the borrower’s company and then will actually collect from the client. Giving control up of collecting payments can make this solution difficult, but again, with bad credit and very few funding sources this may be a good fit to keep a business operating efficiently.

Working Capital Loans

There are many lenders today that offer bad credit working capital loans. What these lenders look at is recent company financials to determine eligibility. This type of loan is not for long term financing but best suited for short term operational expenses. When considering a working capital loan keep in mind that it is a short term business loan.

Business Loans for Women

There are many online lenders today that provide small business loans for women with bad credit. Only existing business owners are eligible and they must have operating revenue for a couple of months. These programs were created to help women business owners succeed even if they have a poor credit history.

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 percentage of credit card sales in advance of those sales. It is also known as a credit card sales loan. A borrower is given a lump sum of cash in advance against future sales, and as those sales are generated a small percentage is deducted until the lump sum and any fees are paid back. 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. Some other great features are that the entire funding process can be completed in as fast as a day, and the repayment process requires minimal effort.

Revenue based Loans

A revenue based business loan can be a fast and convenient way to get business funding with bad credit. Very similar to a merchant cash advance, the borrower sells a percentage of future revenue for immediate cash. As the revenue comes into the business a small amount is deducted until the borrowed principal plus any fees are paid back to the lender. This type of loan is based on the revenue and cash flow of the business so bad credit is not a problem. The main requirement is that there is an existing business generating revenue. For business owners with bad credit a revenue based business loan can be a good business financing alternative.

Credit Unions

Credit Unions are a potential option to consider if you are looking for a business loan with bad credit. Credit Unions, unlike banks, do not service everybody; they are not-for-profit organizations that provide loans and many other financial services to professional groups, religious groups, and maybe even college alumni just to name a few. Members generally share a common bond or field of interest. For many reasons members may be allowed to receive a business loan with very good rates and flexible credit requirements because of their membership. Every Credit Union is different but for many business owners this can be a great source for a business loan with bad credit and is at least worth an inquiry. You can use this tool to find a credit union near you,

Additional Bad Credit Business Financing Options in 2020

Startup Bad Credit Business Loan

Unfortunately most banks and alternative lenders do not have a program that provides startup small business loans to entrepreneurs who do not have an established company with at least some revenue. This does not mean that funding for a company under these circumstances is not possible. In fact there are many websites 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.

Minority Business Funding

Many minority owned businesses struggle to find business loans especially if the owner or entrepreneur has bad credit. These owners often find themselves undeserved in their community. The government has some initiatives to see that these minorities receive financing through their 8(A) Business Development Program. This program was created to help disadvantaged individuals compete in the business marketplace and can be a great resource for minorities seeking a business loan with bad credit.

Business Credit Cards

Business credit cards can be a great way to fund your business operations if business loans are not available. Although there are no specific business credit cards that tout their bad credit options, there are so many offers and every single option has different credit requirements. If your credit is so bad that you cannot get approved for a traditional credit card, you can always try for a secured credit card. In fact, OpenSky offers a secured credit card with no credit check. If you do not qualify for a business credit card with your credit history a secured credit card is a great bad credit business financing option that helps build credit.


Crowdfunding can be a great way to fund your business if you have bad credit. Whether you are just starting up with an idea or have an established business, crowdfunding can be a potential source of business financing. Although this is probably not an option for your typical Mom & Pop shop, it can be good for manufacturers, artists, or inventors that have an innovative product that they are trying to bring to market or build a client base.

Crowdfunding sites allow users to upload their pitch to the online platform and request small amounts of money from many individuals. A sample of the product or a gift is generally all that is required and there is usually no need to pay the money back. This is not a typical business loan but it really comes down to the pitch and bad credit is not an issue. To get started check out this list of crowdfunding business loans for bad credit.

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.

Additional Reading on Bad Credit Business Financing