What Are Bad Credit Business Loans?

  • Finance

Bad credit business loans are financing options for business owners with credit scores typically below 650. These loans help entrepreneurs who can’t qualify for traditional bank financing due to past financial challenges, limited credit history, or economic setbacks.

How They Work
Alternative lenders and specialized financial institutions offer these loans with more flexible approval criteria. Instead of focusing solely on credit scores, they evaluate factors like monthly revenue, cash flow, and time in business. Many require minimum monthly sales of $10,000-$25,000 and at least six months of business operation.

Common Types
Popular options include merchant cash advances, short-term business loans, asset-based lending, and invoice factoring. Each has different requirements and repayment structures to match various business needs.

The Trade-offs
While these loans provide access to capital, they come with higher costs. Interest rates typically range from 15-30% compared to 6-10% for traditional loans. Repayment terms are often shorter, creating higher monthly payments. Many lenders also require personal guarantees or collateral to secure the loan.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.