Can I Get a Business Loan Fast with Less Than a 450 Credit Score?

Obtaining a business loan with a credit score below 450 can indeed be challenging. Most banks and online lenders require a minimum credit score higher than 450, but there are alternative options available for those with lower credit scores. This article explores various financing options, including short-term business loans, business lines of credit, invoice financing, equipment financing, and merchant cash advances, all designed to help businesses with lower credit scores access the funding they need.

Short-Term Business Loans for Bad Credit

For businesses seeking fast access to capital, short-term loans can be a viable option. These loans, typically ranging from 3 to 18 months, are ideal for emergency funding and have a straightforward application process. However, they come with higher interest rates, which can strain cash flow.

Quarterspot is a short-term lender that can work with business owners who have a personal credit score as low as 550. Their fully amortizable loan product ensures that you can be forgiven remaining interest if you pay the loan off early.

Short-Term Business Lines of Credit for Bad Credit

A short-term business line of credit provides quick and flexible access to working capital. These lines offer lower credit limits and higher interest rates compared to longer-term business lines, but they are more accessible to those with bad credit. Kabbage is a lender that requires a personal credit score of at least 550, making it a good option for those with a lower credit score. Applying through Kabbage is simple and involves linking your accounting software to your Kabbage account, with monthly payments replacing the usual daily or weekly installments.

Invoice Financing for Bad Credit

Invoice financing is another excellent option for businesses with bad credit. This method involves using outstanding invoices as collateral to secure advance payments. This self-secured nature of invoice financing makes it easier to get a business loan, especially for those without valuable property to offer as collateral.

Fundbox is an example of a company providing invoice financing that doesn’t even consider your credit score. They offer cash advances ranging from 85 to 90% of the outstanding invoice amount. Payments are made when your customer pays the invoice, minus any processing fees and charges for late payments. This can be a great way for businesses to manage cash flow without worrying about their credit score.

Equipment Financing for Bad Credit

Equipment financing uses the equipment being purchased as collateral to secure a loan. This approach can be beneficial because, once the loan is paid off, the equipment is fully owned by the business. This is often more advantageous than leasing or renting the equipment.

Though equipment financing can be challenging with a bad credit score due to long repayment terms, some lenders, such as those with a minimum credit score as low as 600, still offer this option. Equipment loans operate similarly to car loans, where you are advanced the funds to purchase the equipment and then repay the loan over a set period.

Merchant Cash Advances for Bad Credit

Merchant cash advances (MCAs) are a popular choice for businesses with bad credit. These financing options involve the lender advancing a certain amount of cash, which is repaid from the business’s daily credit card sales. The repayment amount varies based on the percentage of sales, which can be higher during periods of high business activity.

MCAs are among the most expensive forms of bad credit business financing, so it is advisable to use them cautiously. To qualify for an MCA, your business must process credit card transactions. Careful consideration of terms and conditions is crucial to ensure that the repayment you agree to won't significantly impact your business's cash flow.

For more information on financing options, please visit our financing options page.