The Best Business Loans for a 500 Credit Score

Good news: having a credit score of 500 doesn’t make getting a business loan impossible. But since that score is considered poor, you will need to look for bad credit business loans. You should also be prepared for higher borrowing costs, including higher interest rates than lenders would extend to strong credit borrowers.

To find the best business loan, compare multiple lenders and financing offers, searching for the lender that will offer you the lowest rates and favorable terms for your credit level. We researched lenders for you to find seven of the best business loans with a 500 credit score.

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

Yes, it’s possible to find a business loan with a 500 credit score. However, most lenders won’t accept this score, so you will need to research lenders that specialize in bad credit business loans. You will need to go with an online lender since these lenders are most likely to relax their qualifications for loan approval.

Compare the best small business loans for a 500 credit score

SBA microloans: Best for affordable business loans

SBA microloans are government-backed small business loans designed to support businesses that are commonly turned down by traditional lenders. These loans offer loan sizes of up to $50,000 and SBA interest rates ranging from 8 percent to 13 percent. These features are offered in hopes of providing manageable loan payments to disadvantaged businesses.

You can find SBA microloans through approved microlenders, usually nonprofits dedicated to educating small business owners and helping businesses grow. But like most types of SBA loans, the cost of affordability is that it can take 30 to 90 days to complete the funding process.

• Requirements for an SBA microloan
  

  SBA microloans tend to relax eligibility requirements. Some microlenders like Accompany Capital even take credit requirements out of the equation. Common requirements for an SBA microloan include:

  • Personal credit scores of around 500
  • Detailed business plan
  • Collateral or personal guarantee is often required

Fundible: Best for low revenue requirement

Fundible offers the best blend of online business lending and leniency toward credit and revenue. To start, the lender accepts revenue as low as $96,000 per year. Loans offered with this revenue minimum include equipment financing, business lines of credit, bridge loans and invoice financing.

Along with relaxed revenue requirements, a Fundible representative stated that the fintech lender works with business owners who have credit scores as low as 450. Officially, all four of these business loans require a minimum personal credit score of 500, according to the website. This requirement makes Fundible one of the most accessible lenders on the market for bad credit borrowers.

• Requirements for a Fundible small business loan
  

  The requirements vary depending on which small business loan you opt for through Fundible. But its minimum standards to apply are:

  • A 450 personal credit score of at least
  • 6 months in business
  • $96,000 in annual revenue

Fora Financial: Best for fast business loans

Fora Financial stands apart as an online lender granting high-dollar business loans within 24 hours or less. Small business owners can choose between a short-term loan , line of credit or revenue advance, which is the equivalent of a merchant cash advance. It’s also one of the few online lenders to offer SBA loans, in casr you’re looking to go with a government-backed loan. Its loans offer wide-spanning loan amounts starting at $5,000 and going all the way up to $1.5 million.

Online lenders tend to finalize approvals more quickly within 24 hours, while traditional banks might take weeks to approve business loans. Fora Financial gives the chance at small or large business loans with the relaxed lending requirements typical of online lenders.

• Requirements for a Fora Financial small business loan
  

  Fora Financial gives many business owners the opportunity to get the funding they need, even with less-than-stellar credit. Its minimum requirements include:

  • $20,000 in average monthly revenue for the past 3 months
  • 570 personal credit score
  • 6 months in business

Bank of America: Best for credit-building line of credit

Bank of America’s lineup includes a variety of business loans built for different needs, from revolving lines of credit  to equipment loans to one-time short or long-term loans. Its cash-secured business line of credit is one of its most unique loans, designed to help you build business credit and start a relationship with this lender.

Bank of America lets you open this credit line with a minimum $1,000 deposit or more. The security deposit acts as your available credit limit that you can draw from. Over time, Bank of America will graduate your business to its standard unsecured business line of credit once you qualify.

• How to get a Bank of America small business loan
  

  The credit-building line is Bank of America’s most lenient business loan option. Its requirements include:

  • $50,000 in annual revenue
  • Under 2 years in business
  • $1,000 security deposit

Kiva: Best for crowdfunding

Kiva is one of the best-kept secrets in business lending in which a business owner can get a loan with no revenue or credit score requirements. This innovative company blends the key elements of a business loan with crowdfunding to offer the funding you need. Small business owners start by reaching out to their network of family and friends to fund their projects within 15 days or less.

Once the private funding is over, business owners can publicize their financing needs to Kiva’s network of millions of lenders. Unlike traditional loans, Kiva’s business loans don’t charge any interest or loan fees. Kiva works best for microloans of $15,000 or under.

• Requirements for a Kiva small business loan
  

  Kiva is light on the traditional eligibility requirements, relying instead on social credit — or the character — of the business owner to repay the loan. In other words, you don’t need a minimum amount of revenue or minimum credit score to apply. Instead, its main requirements to apply are:

  • Must be 18 years old or older
  • Must use funds for business purposes
  • Must not be in foreclosure or bankruptcy or have current liens

PayPal: Best for no-credit-check business loan

PayPal presents an exclusive business loan offer to small businesses that already use its payment processing platform. PayPal merchants can either choose their working capital loan or short-term loan, both relaxed enough to accept poor credit.

A PayPal working capital loan requires no credit check whatsoever, a rare find in business lending. Instead of using credit, it qualifies you based on the volume of sales you bring in through PayPal. You then repay this loan through a percentage of your business sales until the loan is repaid.

Loan terms are flexible. With the PayPal business loan, you can repay the business loan in 17 to 52 weeks. With the working capital loan, you choose a repayment plan that tells PayPal what percentage of sales gets applied toward the loan.

• Requirements for a PayPal small business loan
  

  While you can easily apply online and get funded in minutes, you need to meet some minimums to get approved:

  PayPal loan	Credit score	Annual revenue	Time in business
  PayPal business loan	Not stated	$33,300	9 months
  PayPal working capital loan	No credit score requirement	$15,000 with a PayPal Business account; $20,000 with a Premiere account	Must have had a PayPal account for 90 days

Uncapped: Best for high-producing startups

Uncapped offers working capital funding and lines of credit through online lending. It relies on analyzing your financial accounts  to approve its loans, rather than using your credit history. Upon applying, you’ll connect your business bank account to Uncapped   to assess your current and future revenue. It can then fund business loans anywhere from $10,000 to $2 million.

These loans assess a one-time fee called a base fee, charged as a percentage of the entire loan such as 0.80 percent. Uncapped also offers a line of credit, allowing you to access funding as you need it up to $2 million.

• Requirements for an Uncapped small business loan
  

  Uncapped requires a high level of revenue to be eligible for its loans. Its requirements include:

  • $100,000 in monthly sales, or $1.2 million annually
  • Amazon sellers need just $10,000 in monthly revenue
  • At least 6 months in business
  • Uncapped specializes in helping businesses with primarily online sales

How much loan can I get with a 500 credit score?

You can qualify for loans as high as $2 million even with a 500 credit score. However, the exact amount will depend on factors like your revenue and how much the lender is willing to offer you. Some lenders may only offer low loan amounts to bad credit borrowers, such as $250,000 or less.

The type of business loan you want will also play a role in how much funding you can receive. SBA microlenders offer loans of up to $50,000, and some have no credit score requirement. Equipment loans may offer loan amounts up to the purchase price of the equipment. The equipment then acts as collateral to back the loan. In addition, invoice financing offers loans from 70 percent to 90 percent of the invoice amount. Choose the type of loan the best fits your business’s funding needs.

How to apply for a small business loan for a 500 credit score

A small business owner with a 500 credit score will need to find the right lender and do the extra groundwork when applying for credit. Taking these steps may boost the odds of approval:

1. Know your credit score

If you know you have bad credit, it’s best to check your exact credit score to know your benchmark when applying for business loans. Most lenders set minimum credit requirements to get approved for a bad credit business loan. You’ll need to meet the lender’s minimum credit score requirement in order to apply with that lender.

For a business loan, the lender may look at your personal or business credit history. You can establish business credit by working with vendors that offer trade credit or by paying for expenses with a business credit card.

2. Find the right type of business loan for bad credit

Getting approved for a business loan may come down to picking the right type of business loan for bad credit. You’ll need to confirm the credit score requirements for some loans like a short-term business loan or line of credit. Others like merchant cash advances are designed specifically for bad credit borrowers.

3. Shop around: Compare eligibility requirements, costs and repayment terms

Once you know what type of loan you need, you want to compare loans from different lenders to see which loan will offer you the best terms. What you should consider:

• Eligibility requirements: You’ll want to see if you meet the lender’s minimum requirements to be eligible for a loan from them. Look for lenders that accept credit scores as low as 500.
• Interest rate and fees: Consider the costs of getting a loan with different lenders. Bad credit business loans tend to have high interest rates anywhere from 30 percent to 100 percent, depending on the lender. You may have to prequalify with a lender to see what interest rates it will offer you. Prequalification allows you to see your loan offer without performing a hard check on your credit. Consider reputable lenders that offer you the lowest costs possible.
• Repayment terms: Most bad credit business loans offer short terms of 24 months or less. If you need low monthly payments, you’ll need to do your research to find a lender with longer terms such as five to seven years. Longer terms will help to stretch out the cost of the loan over a longer time period, lowering each repayment. 

4. Prequalify with multiple lenders

Once you know your funding needs and you’ve narrowed down financing options, you can look for the best bad credit business loans. If available, prequalify with multiple lenders to see the loan terms you qualify for without performing a hard check on your credit.

Then, compare multiple loan offers from different lenders. Your goal is to find the offer with the lowest interest rates and fees and the best features your business is eligible for, such as long repayment terms. Some lenders will require collateral or that you sign a personal guarantee, which makes you personally responsible for repaying the loan.

5. Apply for your loan

Finally, you can formally apply with the lender of your choice. Gather the loan documents required to submit the application, which may include bank statements, business formation documents, tax returns and profit and loss statements. Then, keep in touch with the loan officer in case you need to submit additional documentation or information.

Once you’re approved, you will then provide the lender with your bank information and wait for the funds. Online lenders often offer funding within one or two days, while major banks and credit unions might take a week or two to disburse the funds.

Factors influencing business loan approval with bad credit

Credit score isn’t the only area that lenders look at when evaluating you for a business loan. They look at various factors to get a picture of how you manage your business finances and whether your business brings in enough revenue to cover loan repayments. 

Factors they evaluate:

• Your credit score. If you have a credit score in the low 600s, you will have more options than a business owner with a 500 credit score. Either way, you will need to look for lenders that cater to businesses with bad credit.
• Time in business. If you’ve been in business for a long time and have only recently run into financial hardship, the lender may take your history into account and approve your loan.
• Revenue. Strong revenue and projections of revenue increases will help you prove that your business can repay the loan.
• Current debts. Lenders want to make sure that your business can manage current debts as well as the new loan. They may measure your debt load using the debt-to-income ratio (DTI) and debt service coverage ratio (DSCR), which show whether you have enough revenue to cover all your debts.
• Business plan. Having a well-thought out business plan that outlines revenue projections and how you plan to grow your business will help lenders see that you’re prepared and ready to manage a business loan.

How to improve your chances of approval with bad credit

If your credit is too low and you’re getting denied business loans, you may be able to secure financing with additional help. Take these steps to improve your odds of approval:

1. Take the time to build your credit. If you don’t need funding right away, you could take some time to improve your credit score. You can do so by opening a business credit card, line of credit or trade credit with current vendors. Then, be sure to make on-time payments so that they have a positive effect on your credit score.
2. Find a cosigner. A lender may not be willing to lend to you, but they may approve the loan if a friend, family member or business partner has a good financial history. But make sure the co-signer fully understands their responsibility. If you can’t make business loan repayments, the co-signer will be responsible for making payments on your behalf. If they’re not prepared to do so, you could ruin their credit history and potentially ruin a relationship with that person.
3. Offer collateral. Lenders are more willing to approve you if you have valuable assets to back the loan because it makes you less risky to the lender. In addition, secured loans often help you get approved at a lower interest rate than unsecured business loans.
4. Show high or steady revenue. If your business has strong revenue, it shows your ability to repay the business loan. Some lenders might be willing to overlook a bad credit score if you can prove that you will be able to pay back the loan.

Bottom line

Getting a business loan with a 500 personal credit score will take research to find lenders that will accept your credit level. While major banks aren’t likely to approve a loan for you, you can find several online lenders that may work with you. While options are limited, you can find lenders specializing either in alternative loans or business loans for bad credit. Once you know your options, you can compare loans with the most affordable rates and features that best match your financing purposes.

Frequently asked questions

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

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

• What is the minimum credit score to get an SBA loan?
  

  The minimum credit score for an SBA loan depends on the lender. Banks and credit unions typically require a credit score of 650 or higher. Some online lenders like Creditfy offer SBA loans for credit scores of 600. And some SBA microlenders may not have a credit score requirement at all.

• Can I get a $10,000 loan with a 500 credit score?
  

  It’s possible to get a $10,000 loan with a credit score of 500. It depends on other factors like the type of business loan, how long you’ve been in business and how much revenue you bring in to repay the loan. If you struggle to get a loan from traditional sources, you may qualify for an SBA microloan.

• Can I get a startup business loan with bad credit?
  

  Yes, startup loans tend to have relaxed credit requirements. For example, a lender may accept  a minimum 600 personal credit score for businesses with at least  six months of experience. Some lenders do offer startup business loans for a 500 credit score.

• How can I fund my business with no credit?
  

  Getting a no-credit-check business loan is possible, though difficult, since most lenders set a minimum credit score required to be eligible. You may be limited to startup funding options like business grants, crowdfunding or financing through a pool of investors. PayPal does offer a working capital loan with no credit check, but you’ll need to use PayPal’s payment processing services to be eligible.

• What types of business loans don’t require credit checks?
  

  If you don’t have the credit history to show you’re a good fit for traditional business loans, you might opt for invoice financing, invoice factoring or merchant cash advances. These types of business loans either bypass credit checks entirely or lower credit requirements to accept most loan applications. Invoice financing uses outstanding invoices and your clients’ credit to determine if you’re approved, while merchant cash advances base approvals on your future credit and debit card sales.