Get a Small Business Loan with Bad Credit (2024)

FAQs

Can I get a business loan with a 500 credit score? ›

Yes. Some lenders welcome business owners with credit scores as low as 500. These loans focus less on your credit score and more on the strength of your business and your ability to repay the loan. Most business loans for bad credit will have high interest rates and fees.

It is possible to get a small business loan even if you have bad credit. This is because your credit score doesn't matter as much as the overall financial health of your business. Many lenders require a minimum credit score of 500, at least six months in business, and more than $30,000 in annual revenue.

If you have poor credit score (FICO score between 300 to 579), you're less likely to qualify for certain SBA Loans, specifically, SBA 7(a), CDC/504, Express Loans, and others.

SBA Express loans, part of the SBA's 7(a) loan program, offer the easiest application process and the fastest approval times among all SBA loans. These loans, with payoff periods as long as 25 years, are designed for purposes such as refinancing debt, buying equipment, or improving real estate.

The minimum credit score required for an SBA loan depends on the type of loan. For SBA Microloans, the minimum credit score is typically between 620-640. For SBA 7(a) loans, the minimum credit score is typically 640, but borrowers may find greater success if they can boost their credit score into the 680+ range.

If your credit isn't great, it can be difficult to get a loan from a bank or credit union. But alternative sources, like online and nonprofit lenders, can offer bad credit business loans to borrowers with personal credit scores as low as 500.

While LLCs can be started at any credit level, there will be some notable disadvantages for business owners who have bad credit. Here are a few examples: Money will be hard to come by. Having bad personal credit will generally make it more difficult to get a bank loan to start or expand your LLC.

Because many business lenders require prospective borrowers to meet minimum annual revenue requirements to qualify for a loan, it's typically challenging to secure a traditional business loan. However, some lenders willingly provide small business loans to startups with no current revenue.

Lenders check business credit scores, but they will review personal credit if they can't find valuable information from the business credit.

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

Do people get denied for SBA loans? ›

You're not alone if you applied for an SBA loan and were denied. Most small businesses struggle to qualify, with over 50% of applicants being rejected. You can take concrete steps to improve your application, whether applying for the first time, trying to appeal a denial, or reapplying for a loan.

Failing to meet a lender's eligibility requirements for a business loan can result in denial. All lenders have specific criteria related to credit scores, annual revenue, time in business and other factors. What to do: It's important to review the eligibility requirements of potential lenders before applying.

Yes, it can be easier to get an LLC loan. Some lenders won't lend to sole proprietors.

It's possible to find unsecured business loans through the Small Business Administration (SBA) and online lenders. A no-collateral business loan doesn't mean that you won't be required to assume some level of personal financial responsibility for the debt.

SBA Express loans can be approved in as little as two to three days. Financing terms are incredibly solid, too, thanks to the SBA's 50% guarantee of the loan amount.

You can likely borrow anywhere from a few hundred dollars to $50,000 with a 500 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

Good personal credit.

Business lenders often rely on personal rather than business credit scores. You generally need a credit score of 670 or higher, although 775 and up is better for a $500K loan. To compare top options for good credit borrowers, check out our guide.

You'll generally need a fair score of 600 or higher to qualify for a small business loan. However, some lenders may approve a loan if your score is as low as 500. Understanding what influences your credit score can help you improve it.

Here's an overview of what high, medium, and low risk might look like to a lender². 80 or over: A business credit score above 80 is typically considered excellent.