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Stay the Course: Navigate Start Up Business Loans with Bad Credit

Faith Stewart
October 14, 2018
Start Up Business Loans with Bad Credit Suite

Don’t Drift in a Sea of Bad Credit

Bad credit shipwrecks many a start up, but there is hope in the life preserver of start up business loans with bad credit. The problem often comes with navigating through the options. There are some real duds out there that will leave you worse off than when you began. Finding the best funding options for a not so great credit score can be a challenge.  

Not only are we going to help you find those options, but we will help you see how you can use them to build your business credit. Then you will not have to worry about finding yourself drifting again due to bad credit. That’s right, you can actually repair a dismal credit score.

Why Credit Matters 

Credit matters because lenders use it as a tool to help them reduce risk. There is always a certain amount of risk when it comes to lending money.  There is never a guarantee of pay back. However, most lenders feel that if you have a good credit score, you are more likely to repay your debts. Often this is true, because a good credit score indicates that you have done so in the past.  

The thing is, a bad credit score doesn’t necessarily mean that you will not repay your debts. It could mean that you just ran into some hard times. Maybe you are rebuilding. Perhaps you are earnestly seeking dry land. Lenders that offer start up business loans with bad credit understand this, and they want to help.

It is important to remember that their goodwill doesn’t come without a cost however. Terms and interest rates, as well as collateral requirements, are likely to be much higher. In many cases though, it is worth it.  Especially if it means you get to set your sights on the dry land of business start up and growth.

Learn bank rating secrets with Credit Suite's free, sure-fire guide.

Keep your business protected with our professional business credit monitoring.

Why Would Someone with Bad Credit Need Financing?

There are people on both sides of this coin saying “duh” to this question. I mean really, why wouldn’t someone with bad credit need financing? They need funding to build a business that will allow them to pay their debts.  They also need debt because, in order to build credit, you have to be making payments on something.

Utility and vendor payments can help, but on time payments to creditors are the fastest way to a high credit score.

The other side says if they can’t manage their finances well, then they have no business seeking financing for a business.

It is a vicious cycle, and those caught in it feel like they will be in the rip tide indefinitely, forever parallel with the shore but never being able to make contact.

Fortunately, with those lenders that are willing to make startup business loans with bad credit, that does not have to be the case.

Who Offers Start Up Business Loans with Bad Credit?

There are many options, but these are some of our favorites. It could be a challenge to find the one that will work best for your situation. There are enough possibilities, however,  that there is bound to be one that will work for you.


Accion is a good option for those that have low personal debt. You do have to have a solid business plan, but there is no minimum required amount of time in business. This makes it a great option for true “just starting” start up companies. The minimum credit score is 575.  In some cases they will go as low as 500.  

If you have been in business for less than 6 months, the business must be home based. There must be less than $500 in debt. And terms range from 6 to 60 months. The APR can range from 7% to 34%. There is a personal guarantee requirement also, and sometimes they ask for specific collateral depending on the situation.

Learn bank rating secrets with Credit Suite's free, sure-fire guide.

Keep your business protected with our professional business credit monitoring.


There are options at BlueVine to receive a line of credit or to do invoice factoring. The minimum credit score for a line of credit is 600 and the minimum time in business is 6 months. For invoice factoring, they will go as low as 530 if you have been in business for at least 3 months. There are also minimum income requirements. It is $120,000 per year for a line of credit and $100,000 per year for invoice factoring.

They run on 6-month terms, and amounts range from $5,000 to $5,000,000. Interest rates are variable between 15 and 78%. 


This isn’t exactly what you think of when you go looking for start up business loans with bad credit. That is because it is technically a personal loan, but you could use it to fund a business. Because it is a personal loan, there is no required time in business. You can borrow from $1,000 to $5,000 over a term of 2 to 5 years. Interest rates range from 9.95 to 36%.


This is one we talk about a lot around here, and it’s no wonder! It is great as a life preserver for those looking to find start up business loans with bad credit. There is no minimum credit score and no minimum time in business. You can borrow up to $10,000 for 6 to 36 months. There is no collateral requirement, and the interest rate is 0%!

The question is always “What’s the catch?” Well here it is. You have to have friends, family, and business associates willing to lend you some of the money. There is a social lending requirement that you must meet.

Once you meet that, the loan goes public and you can finish out the amount you want to borrow with small amounts from random strangers. If you are willing to ask those you know and love to throw you a life vest, you could end up sailing calm seas after working with Kiva. 


A young start up that is already producing revenue may want to check out Credible. They are a great source of start up business loans with bad credit. The minimum credit score is 500, and you have to have been in business for 6 months.  

They offer two different types of loans. One of them is a working capital loan, and the other is an expansion loan. You can get a 6 to 17-month term for a working capital loan and an 18 to 24-month term for a business expansion loan.  

The interest rate varies dramatically based on a number of factors, and there is a personal guarantee or blanket lien requirement.


Does it have to be a Loan?

While everyone else is looking for lifeboats during a storm, you may do better to look for another means of escape. Rafts work just as well, and sometimes they are easier to come by. In financial terms, consider options other than financing for funding.  


Indiegogo and Kickstarter are just two of many crowdfunding sites that offer a way to find micro investors. They can support your business without you taking out a loan. Funding options and flexibility varies, but it is something to look into if you want to stay out of debt and avoid a credit check.

GrantsStart Up Business Loans with Bad Credit Suite

There are a ton of small business grants available as alternative to start up business loans with bad credit. This is basically free money that requires no credit check. However, they aren’t for everyone. If you are a minority, a veteran, or female you are much more likely to qualify for a grant.

If you are working to help a low income area, you may have an easier time finding a grant as well. 

Other Options

Keep in mind there is no shame is taking out a loan against a retirement fund or asking friends and family to help.  When it comes to making your business dreams come true, you have to do what it takes. They know your story, your history, and your drive. If you were really on a stormy sea, they would be the first to try to save you.

How Do you Know Which Small Business Loan with Bad Credit is Best for You? 

If you are brand new and not yet producing revenue, you will need to look at those that do not have a minimum time in business requirement. If your credit score is less than 600, you need to look for those that go down that low or lower for their minimum credit score required.

Basically, look for the life boat that has room for you. If they are all full, start researching the rafts. It all depends on your individual situation.

Learn bank rating secrets with Credit Suite's free, sure-fire guide.

Keep your business protected with our professional business credit monitoring.

Navigate Safer Waters

Once you find your start up business loan with bad credit, it is time to start getting rid of the bad credit. Make your payments consistently on time.  Early is even better. Seek out vendors that will report your payments to the credit agencies, and ask utilities to do the same.

Once you get your credit score higher, you can refinance.  Get rid of those start up business loans with bad credit, and replace them with more favorable terms and interest rates.

Bad credit is a storm no one wants to go through. With the right navigator however, the choppy waters are much easier to sail through.  Finding a rescue device doesn’t seem quite as daunting. You may have to make some sacrifices in the way of terms, interest rates, and personal guarantees, but if it gets you to dry land safely, it will be worth it.

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