Best Startup Business Loans for Bad Credit in 2024
Launching a small venture can be a costly venture. Regardless of whether you're a solo entrepreneur requiring a laptop or a construction company purchasing a plethora of heavy machinery, startup expenses are a harsh reality. From purchasing inventory and Best Startup Business Loans for Bad Credit in 2024 to paying employees or contractors, and of course, paying rent every month, the financial burden can be overwhelming.
Top Business Lenders with Lenient Requirements
Discover the best business loan options with minimal credit score requirements and short business tenure.
Our curated list showcases lenders that accept credit scores as low as 650 and have a business history of six months or less.
| Lender/Funder* | Loan/FInancing Type | Minimum Time in Business | Minimum Credit Score | Time to Funds (After Approval) |
| ClickLease | Equipment Financing | Any | 520 | As soon as same day |
| Gillman-Bagley | Invoice Factoring | 3 months | N/A | As soon as next day |
| Eagle Business Funding | Invoice Factoring | None | N/A | 48 hours |
| Credibly | Business Cash Advance | 6 months | 500 | 48 hours |
| Expansion Capital Group | Business Cash Advance | 6 months | 500 | Within 24 hours |
| Good Funding | Business Cash Advance | 3 months | 575 | Same day |
| Fundbox | Line of Credit | 6 months | 600 | Same day |
Additional lenders to consider
Financing Solutions for the Self-Employed
Business Experience
Credit Score Requirements
Get instant financing for your business with Giggle Finance, catering to the needs of small business owners and contract workers.
They eliminate Best Startup Business Loans for Bad Credit in 2024 need for a minimum credit score, offering flexible financing options. However, the maximum loan amount is capped Best Startup Business Loans for Bad Credit in 2024 $5,000, ensuring a tailored approach to your business needs.
Financing Solutions for the Self-Employed
Business Experience
Credit Score Requirements
Get instant financing for your business with Giggle Finance, catering to the needs of small business owners and contract workers.
They eliminate the need for a minimum credit score, offering flexible financing options. However, the maximum loan amount is capped at $5,000, ensuring a tailored approach to your business needs.
Business Solutions for the Aspiring Best Startup Business Loans for Bad Credit in 2024 Experience
Credit Score Requirements
For entrepreneurs with less-than-perfect credit, a viable financing option is available through a nonprofit lender, Dreamspring, which provides term loans ranging from $1,000 Best Startup Business Loans for Bad Credit in 2024 $250,000 to startups with a minimum credit score of 600.
Operating in 27 states, Best Startup Business Loans for Bad Credit in 2024 caters to a wide geographic area, offering a lifeline to startups in need of capital.
Dreamspring
Business History
Minimum Credit Score
Dreamspring is a nonprofit lender, or Best Startup Business Loans for Bad Credit in 2024 Development Financial Institution (CDFI), offering term loans from $1,000 to $250,000.
They focus on startups with a minimum credit score of 600. Operating in 27 states, Dreamspring provides a wide range of financing options to startups.
Alternative Loan Options for Startups with Bad Credit
For startups with lower credit scores, there are several financing options available.
One viable option is to explore alternative loans, which can provide a lifeline to entrepreneurs in need of capital.
Alternative Loan Options
While the Small Business Administration (SBA) 7(a) and 504 loan programs are primarily designed for established businesses, the SBA does offer two startup loan options.
1.
Microloans
The Small Business Administration's (SBA) microloan program is tailored to support tiny businesses, fledgling ventures, and non-profit childcare facilities. This program provides loans up to $50,000, with the average loan amount being around $13,000. The funds can be utilized for a wide range of purposes, including working capital, inventory, supplies, and machinery or equipment. However, microloans cannot be used to settle existing debts or purchase real estate.
To be eligible for an SBA Microloan, the borrower must meet specific requirements:
- Credit history – The borrower's credit history is scrutinized.
Although there is no minimum credit score requirement, a good credit history can significantly boost the chances of approval.
- Collateral – Depending on the loan amount, the borrower may be required to provide collateral to secure the loan.
The Small Business Administration (SBA) doesn't actually provide the loan itself, but rather Best Startup Business Loans for Bad Credit in 2024 with approved intermediary lenders to make these loans available to entrepreneurs.
The Community Advantage (CA) program, now part of the SBA 7(a) program, focuses on stimulating economic growth in underprivileged markets.
Community Advantage Small Business Lending Companies (SBLCs) can provide loans of up to $350,000 to support various business activities, including initial investments, business expansion, and working capital.
The Community Advantage loan program has specific eligibility criteria.
- Credit History Requirements - The lender evaluates the borrower's credit history, although there's no set minimum credit score.
Generally, a good credit history increases the likelihood of approval.
- Collateral Requirements - The amount of collateral needed varies based on the loan amount.
The lender determines the specifics on a case-by-case basis.
- Location Requirements - The business must be situated in a designated underserved market, including areas with low-to-moderate incomes, Empowerment Zones, Enterprise Communities, Historically Underutilized Business Zones, Promise Zones, Opportunity Zones, and rural areas.
Each lender is authorized to operate within a specific state or group of states.
- Demographics of Underserved Markets: Underserved markets encompass newer businesses in operation for less than two years, businesses that are at least 51% owned by veterans, or businesses that have at least 50% low-income workers.
It's worth noting that, similar to the SBA Microloan program, the SBA does not provide the loan directly, but rather partners with approved SBLCs to offer Community Advantage loans.
Online Lenders for Bad Credit Business Loans
Online lenders are a popular choice for startups with bad credit, offering a range of financing options that cater to businesses Best Startup Business Loans for Bad Credit in 2024 less-than-perfect credit scores.
While Best Startup Business Loans for Bad Credit in 2024 provide SBA loans and term loans with stricter credit Best Startup Business Loans for Bad Credit in 2024, they also offer alternative financing options that are not dependent on credit history.
Flexible Financing Options for Businesses
Unlock the power of flexible financing for your business with online lenders offering a range of options.
Business Lines of Credit
Take advantage of business lines of credit, allowing you Best Startup Business Loans for Bad Credit in 2024 draw funds up to a maximum limit as needed, with interest only paid on the amount used.
Invoice Financing
Get immediate cash flow with invoice financing, borrowing against your outstanding invoices to meet your business needs.
Business Cash Advances
Get a cash injection with a business cash advance, exchanging a portion of your future sales for a lump sum, ideal for businesses with strong sales but poor credit.
Equipment Financing
Equipment financing options are available to businesses, allowing you to acquire the equipment you need to grow your business.
Equipment financing is available in two forms: a term loan or an equipment lease, designed to help individuals or businesses acquire high-quality equipment.
Since the equipment acts as a partial guarantee for the loan, lenders often have more flexible credit score requirements, making it easier for borrowers to secure financing.
Community Development Financial Institutions (CDFIs)
Community Development Financial Institutions, or CDFIs, are private financial organizations that focus on providing responsible, affordable lending to low-income, low-wealth, and other disadvantaged communities.
These organizations play a vital role in stimulating economic growth and opportunities in some of the nation's most disadvantaged areas. CDFIs offer a diverse range of financial products and services, including business loans, to help underserved communities break into the economic mainstream.
Across the United States, Community Development Financial Institutions (CDFIs) can be found, and individuals can easily locate one near them by exploring the CDFI Fund’s Award Database.
This valuable resource offers insights into CDFIs that have received financial awards or recognition from the U.S. Department of the Treasury, enabling users to make informed decisions about potential partnerships or funding opportunities.
When it comes to the requirements for securing a business loan through a CDFI, the process can vary significantly from one institution to another.
However, common requirements often include the submission of a comprehensive business plan, detailed financial projections, and a thorough review of personal and business credit history, as well as the provision of collateral. In some cases, CDFIs may also have specific geographic or community requirements for the business, and it is highly recommended that individuals directly contact a CDFI to understand their unique lending criteria and application process.
Securing a Startup Business Loan with a Poor Credit History
Breaking Down the Barriers to Business Financing with Poor Credit
Embarking on the journey to secure funding for your startup with a less-than-perfect credit score can seem like a daunting task, but it's not a roadblock to Best Startup Business Loans for Bad Credit in 2024.
Let's explore the steps to get your startup on the path to financial stability, even with a credit score that's a little behind the curve.
Step 1: Get a Clear Picture of Your Business Needs
- Assess your startup's financial requirements – Understanding how much money your business needs and how it will be used is the first step to securing a startup business loan. This clarity will help you determine the type of loan that's best suited for your business.
Step 2: Research and Compare Your Options
- Explore the various loan options available to startups – Each type of loan has its own set of eligibility criteria and terms, including minimum credit score requirements.
Compare these requirements to your current credit score to determine if you may be a good fit.
Step 3: Find the Right Financing Solution
- Find a loan that aligns with your business needs and credit score – With the right loan, you can get the funding you need to take your startup to the next level.
- Develop a robust business strategy – Typically, lenders demand a detailed business plan, encompassing a business overview, product/service descriptions, market analysis, organizational structure, and financial projections.
- Accumulate necessary paperwork – Collect all necessary documents, including financial statements, tax returns, and legal documents, as the specific documents required will vary by lender.
- Submit a loan application – Upon gathering all required documents and a comprehensive business plan, submit a loan application, which may be conducted online or in-person, depending on the lender.
Alternative financing options
For entrepreneurs with lower credit scores, there are alternative financing options beyond traditional small business loans.
Alternative Funding Channels
Consider alternative financing options, such as crowdfunding, which enables you to raise capital through small, collective investments from a large pool of people.
Alternative Funding Channels
Another alternative financing option is venture capital, which involves partnering with experienced investors who provide substantial funding in exchange for a share of your business.
Alternative Funding Channels
Grants are a viable alternative financing option for entrepreneurs, offering a source of funding with minimal equity exchange.
Unlocking the Power of Funding for Your Business
Government departments, foundations, trusts, and corporations offer business grants, providing a significant boost to entrepreneurs and small business owners.
The best part? These grants don't require repayment, making them a lucrative opportunity for growth and development. However, the competition for these grants can be fierce, and the application process can be a time-consuming and laborious process.
Boosting Your Business with Business Credit
Qualifying for a business credit card can be a significant challenge, with a minimum credit score of 650 required.
Nevertheless, for those who meet this threshold, a business credit card can be a valuable tool for building credit and covering small, short-term expenses.
Even in tough times, it's possible to secure a personal loan despite a less-than-stellar credit history. While it's not the most desirable choice, it can be a lifeline for entrepreneurs in need of capital to launch their business. Before making a decision, it's crucial to scrutinize the loan's terms and interest rates to avoid financial pitfalls.
Common Questions
A credit score below 580, according to Best Startup Business Loans for Bad Credit in 2024 FICO scale, is often viewed as a red flag.
This score is a reflection of a history of missed or late payments, loan defaults, or other financial missteps. Lenders perceive a low credit score as a higher risk, often resulting in higher interest rates or, in some Best Startup Business Loans for Bad Credit in 2024, loan Best Startup Business Loans for Bad Credit in 2024. However, it's essential to note that different lenders may have varying definitions of a "bad" credit score, so it's always a good idea to check with your specific lender.
What credit score is needed for startup business loans?
Think of credit scores like the altitude of a mountain resort – the higher the better for skiers.
However, for lenders, the higher the credit score, the better. While a higher score can significantly improve your Best Startup Business Loans for Bad Credit in 2024 of loan approval, lenders do have a minimum threshold. For instance, a score of 650 can open doors to approval, but the higher the score, the more attractive you become to lenders. On the other Best Startup Business Loans for Bad Credit in 2024, a score below 600 can limit your business funding options, but there are still some alternatives available.
For instance, invoice financing, equipment financing, and business cash advances do not require a minimum credit score. However, the credit score of 500 can still be a barrier to some lenders, but some may still be willing to offer financing options to business owners with scores in the 500's.
Can a business with a 500 credit score still get a loan?
Unfortunately, a credit score below 600 can significantly limit your business funding options.
However, there are still some financing options available, such as invoice financing, equipment financing, and business cash advances. While a score of 500 may not be ideal, some lenders may still be willing to offer financing options to business owners with scores in Best Startup Business Loans for Bad Credit in 2024 500's.
It's essential to shop around and compare different lenders to find the best options for your business.
What’s the difference between a personal credit score and a business credit score?
Imagine your credit score as a unique financial identity card, boasting a score between 300 and 850, a true reflection of your creditworthiness.
This score is a culmination of your credit history and repayment habits, serving as a benchmark for lenders to gauge your financial reliability. On the other hand, a business credit score, typically ranging Best Startup Business Loans for Bad Credit in 2024 0 to 100, is a distinct evaluation of your company's creditworthiness, taking into account factors such as outstanding debts, repayment history, and the business's age and size.
Although these scores operate independently, lenders often prioritize your personal credit score as the primary factor in determining your creditworthiness.
This means that even a business with no credit or a poor credit history may still qualify for a loan, as a strong personal credit score can often make up for these shortcomings.
Getting started with our application is completely risk-free and won't affect your credit score.
Important Disclaimer: The information presented is accurate as of our initial page publishing date (February 5, 2024). While we strive to keep our content up to date, it may differ from other contexts, such as financial information from other providers or specific product websites.
The information provided is presented to you without any guarantees. When reviewing offers, please carefully review the terms and conditions, policies, and agreements of the financial institution.
The ranges provided here are not pre-qualified offers and may vary based on your application. Lendio may receive compensation from the financial institutions featured on our page if you receive financing through them.
About the author
Tanner Cupello
Tanner Cupello has spent eight years honing his expertise in the small business lending sector, empowering countless entrepreneurs to secure the necessary funding to fuel their business growth and expansion.
As the leader of the funding team at Lendio, he not only oversees the entire operation but also trains his team of funding managers on the intricacies of business loan products, fostering a vast network of over 75 lending partners.
