Can You Get a Small Business Loan with Bad Credit?

If you have bad credit, you may be wondering if it's possible to get a loan for your small business. The good news is that it is possible to get a microloan even with bad credit. However, it's important to keep an eye on both your personal and business credit reports and scores. It's much easier to get a short-term loan from an alternative online lender that's willing to work with your situation than from traditional lenders.

Generally, business owners must have a credit score of 560 or higher and be willing to wait up to two weeks to receive the funds. Unfortunately, if you have poor credit, your chances of getting approved for a loan from traditional banks or credit unions are slim. Good credit ratings can help you qualify for better financing options, but it's still possible to get a loan from an online lender even if you don't have perfect credit. Many online lenders offer prequalifications online so you can check rates without having strong credit, and the qualification criteria can be more flexible. A line of credit or a small business loan from an online lender could be a much more realistic option and has become the first funding option for many businesses today. Business owners seeking unsecured loans can access a wide variety of options, including term loans, lines of credit, cash advances for merchants and factoring invoices.

Many lenders that provide small business loans check personal credit, so if you don't meet the required minimum credit scores, it can be difficult to find a lender that will approve your loan request. To qualify for a loan, your business must usually be at least three to six months old. You'll also need to provide your company's bank account details so that the funds can be deposited into your account once your request is approved. If you're not sure where to start, we recommend making an appointment with someone from the Small Business Development Center (SBDC) for help. Another financing option is equipment financing, which can be useful if you need to purchase equipment such as computers, vehicles or machinery for your company.

Before filling out any funding requests for your business, make sure you read the eligibility requirements, terms and conditions, and any other small print. In some cases, you may also have to provide security such as a cash deposit or property to back up the loan.