Guaranteed Approval: Startup Business Loans with Bad Credit in 2023

Securing guaranteed approval for a no-documentation startup business loan with poor credit in 2022 and 2023 can prove difficult. Traditional financial institutions and modern banks often have very stringent credit qualifications and may hesitate to extend credit to those with less-than-stellar credit histories.

However, there are specialized lenders, including private lenders, who cater to startups and those with bad credit. Here are some alternative avenues to explore:

Microloans: These are modest-sized loans aimed at assisting startups and small enterprises. Compared to conventional business loans, they usually have more lenient approval criteria and are often targeted at businesses with poor credit histories.

Business Credit Cards: Another alternative for those with poor credit is to consider business credit cards specifically designed for such circumstances. These can also assist in gradually improving your credit score over time.

Crowdfunding: Platforms such as Kickstarter and Indiegogo offer you the chance to raise funds from a broad audience. If you can captivate potential backers with a compelling business narrative, this might be an effective funding route for you.

Peer-to-Peer Lending: Websites like Lending Club and Prosper serve as intermediaries between borrowers and individual investors willing to lend money. This could be a viable option if you have a persuasive business plan that can assure investors of your venture’s potential success.

20 companies that offer guaranteed startup loans to businesses with bad credit:

1. OnDeck: Known for its fast approval process, OnDeck offers business loans to those with a credit score as low as 600. While they may require some documentation, they are generally more lenient than traditional banks.

2. Kabbage: Acquired by American Express, Kabbage is known for offering lines of credit to small businesses. Their application process is less dependent on credit score and more on real-time business performance.

3. LendingClub: LendingClub offers peer-to-peer lending, which might be more forgiving of poor credit scores. They focus more on the viability of your business plan rather than just your credit history.

4. BlueVine: BlueVine offers a variety of funding solutions like lines of credit and invoice factoring. They may consider other metrics beyond just credit score, making it accessible for those with bad credit.

5. Fundbox: Fundbox provides revolving lines of credit and invoice financing. They consider various factors for approval and not just your credit score, which may be advantageous for those with bad credit.

6. PayPal Working Capital: If you process payments through PayPal, you could be eligible for a loan through PayPal Working Capital. They base loan approval on PayPal sales history rather than credit score.

7. Square Capital: Similar to PayPal, if you use Square to process payments, you could qualify for a loan based on your transaction history, bypassing the need for a strong credit score.

8. National Funding: This lender offers bad credit business loans and may provide funding with minimal documentation. They take a broader view of your financial situation, making it easier for those with poor credit to secure funding.

9. Credibly: Credibly offers various types of business loans and is known for its lenient qualification criteria. They may not require extensive documentation and may consider businesses with bad credit.

10. Accord Small Business Finance: This Canadian company offers asset-based loans, meaning your credit score may be less of an issue if you have valuable business assets to leverage.

11. QuickBridge: Offering short-term loans, QuickBridge looks at your business performance more than your credit history. This makes it easier for businesses with poor credit to get approved.

12. Fora Financial: Known for providing funding solutions for businesses with poor credit, Fora Financial offers quick funding with minimal documentation.

13. CanCapital: This company specializes in merchant cash advances, which are based on daily credit card sales rather than credit history. It’s a good option if your business has strong sales but a poor credit rating.

14. Reliant Funding: Reliant Funding offers fast approval for bad credit business loans with minimal documentation, focusing on the health of the business rather than the owner’s credit score.

15. Swift Capital: Acquired by PayPal, Swift Capital provides quick funding solutions with a focus on business performance over credit history. Their streamlined approval process requires minimal documentation.

16. Accion: Accion offers startup business loans for women and minority groups with bad credit. They offer loans up to $100,000 with a minimum credit score of 570.
17. Lendio: Lendio can find lenders willing to work with poor credit scores. They offer a variety of financing options, including short-term loans and lines of credit.
18. Lantern by SoFi: Lantern by SoFi offers unsecured business startup loans for small business owners with bad or thin credit and no collateral.
19. Fora Financial: Fora Financial offers short-term business loans for startups with bad credit up to $1,500,000 with a minimum credit score of 500.
20. LendingTree: LendingTree offers bad credit business loans with credit scores as low as 500. They offer a variety of funding options, including term loans and equipment financing.

Some Recent Trends & Statistics Related to Bad Credit Startup Loans in 2023:

1. Online lenders are a popular option for startups looking to get a business loan with bad credit. They often have more lenient terms and less stringent requirements than traditional banks (source).

2. Bad credit term loans often come with smaller loan amounts and short repayment terms. Interest rates on bad credit business loans commonly range from 25 percent and upward, though it depends on your exact credit risk (source).

3. The most common reason for small businesses being denied at least some financing is their credit score. At 36% of denied applicants, this is the most cited reason (source).

4. Small businesses are picking alternative financing options, such as crowdfunding, peer-to-peer lending, and fintech platforms (source).

5. The outstanding debt to small businesses has decreased from 80% in 2020 to 74% in 2021, with most firms having $100,000 or less in debt (source).

6. National Business Capital is a lender that offers no credit check for certain financing options, making it a good option for those with bad credit (source).

7. Banks and nonbank lenders are “tightening up,” which makes access to capital more challenging. It will be increasingly difficult for small business owners to take out loans and access money the way they did before (source).

Overall, it appears that bad credit can significantly impact a small business’s ability to secure a loan. However, there are still options available, such as online lenders and alternative financing options. It is important for small business owners to do their research and explore all options before making a decision.

Should I Seek a Bad Credit Startup Business Loan That Will Accept Me?

The question of whether or not to seek a bad credit startup business loan largely depends on your financial situation, business needs, and growth prospects. While a loan with poor credit terms might be more accessible, they often come with high interest rates and stringent repayment conditions.

Before jumping into such a loan, assess your business plan carefully and consider other avenues like grants, angel investors, or bootstrapping. Remember that a loan is a liability that you’ll need to pay back; hence, ensuring your business can handle the financial burden is critical.

Can I Get a Business Loan With Credit Score 600?

A credit score of 600 isn’t ideal but doesn’t entirely close the doors to obtaining a business loan either. Alternative lenders like OnDeck and LendingClub are more lenient with credit score requirements and often look at other metrics like business performance and revenue streams. However, the trade-off usually comes in the form of higher interest rates and potentially shorter repayment periods. A credit score of 600 might limit your options, but it doesn’t make them nonexistent. Conduct thorough research to find lenders whose terms you can comply with while growing your business.

Can I Get a Business Loan With Credit Score 500?

Securing a business loan with a credit score of 500 will be challenging but not impossible. Traditional lenders are likely to be out of the question, but alternative lenders like National Funding or Fora Financial might be willing to take a risk, especially if your business shows promising revenue and growth.

Keep in mind that the cost of this risk usually comes at a high price—expect to face steep interest rates and perhaps onerous repayment terms. Consider this option only if you are highly confident that the cash infusion will generate a return on investment that outweighs the cost of the loan.

Can I Get a Business Loan With Credit Score 400?

A credit score of 400 is severely low and will drastically limit your financing options. Most traditional and alternative lenders will likely view this score as too risky. However, asset-based loans or merchant cash advances from companies like CanCapital or Reliant Funding might still be an option. 

These types of loans are based more on your business’s assets or daily credit card sales rather than your credit score. Understand, though, that the risk to the lender will be reflected in very high interest rates and unfavorable terms. Carefully weigh whether your business will be able to handle this kind of financial burden.

Can I Just Get a Startup Business Loan With No Credit?

Having no credit history is a slightly different challenge than having poor credit. Lenders have no basis on which to judge your financial responsibility, so you’ll need to provide evidence of your business’s viability and revenue streams. PayPal Working Capital and Square Capital offer loans based primarily on business performance, for instance. Additionally, you might explore non-traditional avenues like crowdfunding or grants that don’t require a credit history for approval. If you go the loan route, expect to face higher interest rates and stringent repayment terms until you can build a credit history.

In summary, while it is possible to get a business loan with bad or no credit, it’s essential to consider whether the terms of the loan make financial sense for your business. Always read the fine print, understand the interest rates and repayment terms, and most importantly, make sure that your business can sustain the extra financial burden.

Here are 15 Tips for Startup Founders on How to Get that Guaranteed Startup Loan even with Bad Credit!

What are alternatives to bad credit startup loans?

1. Bootstrapping: This is when you use your own savings to fund your business. It’s the most risk-free in terms of not owing anyone else, but it does mean taking on all the financial risk yourself.

2. Friends and Family: Borrowing from friends and family is a common way for startups to receive funding. However, it’s crucial to treat it as a professional transaction. Create a written agreement specifying the terms of the loan or investment.

3. Crowdfunding: Platforms like Kickstarter, Indiegogo, and GoFundMe allow businesses to raise small amounts of money from many people. This isn’t a loan, so there’s no debt to repay. However, you may need to give backers product samples, discounts, or other incentives.

4. Angel Investors: These are individuals who provide capital for a business startup, usually in exchange for convertible debt or ownership equity. While your credit score may be less of a concern for them, they’ll be interested in your business plan, the viability of your idea, and potential returns.

5. Venture Capital: Venture capitalists are professional groups that manage pooled funds from many investors to invest in startups and small businesses. They usually come in when you have a proven business model and are looking to scale, not at the very beginning.

6. Equity Financing: This involves selling shares of your business to investors. By doing this, you won’t have to repay a loan, but you will give up a percentage of ownership in your business.

7. Microloans: These are smaller loans, often provided by nonprofit organizations, to assist startups, smaller businesses, or underrepresented business owners. Organizations like the U.S. Small Business Administration’s Microloan Program or Kiva can offer microloans.

8. Trade Equity or Services: Instead of borrowing money, you can offer a service or a stake in your company in exchange for services you need, such as web development, marketing, or manufacturing.

9. Business Credit Cards: While they might have higher interest rates, business credit cards can be a short-term solution. But be careful; the interest rates can add up, and mismanagement can further damage your credit.

10. Asset-Based Financing: This involves using your assets (like unpaid invoices or equipment) as collateral to secure a loan. Factoring, or selling unpaid invoices at a discount for immediate cash, is a form of this.

11. Partnerships: If you find someone who believes in your idea and has the funds or good credit to invest, you can form a partnership. This person can then handle the financial aspects in exchange for equity or profits.

12. Grants: Various organizations, especially government agencies, offer grants to startups, especially in specific sectors. Grants are funds you don’t need to repay, but they often come with conditions or specific requirements.

13. 401(k) Financing or Rollover for Business Start-ups (ROBS): If you have accumulated funds in your 401(k) or another eligible retirement account, you might consider using them to finance your startup. The ROBS process allows entrepreneurs to invest their retirement funds directly into their business without incurring early withdrawal penalties or taxes. It’s not a loan against your 401(k), so there’s no debt to repay, and it doesn’t trigger early withdrawal penalties. However, it’s essential to note that this strategy involves significant risk. If your startup fails, you could lose your retirement savings. It’s recommended to consult with financial and tax experts before pursuing this option.