Steps to Apply:
1
Quick Application:
Complete our simple online form and receive swift approvals.
2
Explore Choices:
Compare various options to find the ideal solution for your needs.
3
Personalize Your Terms:
​Choose the options that best suit your business objectives.
4
Get Funding:
Access funds within a few business days for most programs.
Get the Best Small Business Loan for Bad Credit
MPF specializes in connecting small business owners with the best loan options, even if they have bad credit. We focus on providing tailored financial solutions to help businesses overcome challenges and achieve their goals.
Need help? Reach out to us:
Email: CS@merchantprofunding.com
Bad Credit Business Loans
Contrary to popular belief, a poor credit score is not always an indicator of irresponsibility. Many hardworking small business owners have poor credit for reasons beyond their control. It's common for a business owner to use personal finances to keep a business alive in its early years, and once your credit score takes a big hit, it takes a long time to rebuild. Recognizing this, companies like Merchant Pro Funding (MPF) offer solutions specifically designed for small business owners with poor credit, known as Bad Credit Business Loans. These financing options lack the high fees and harsh repayment terms that could otherwise jeopardize your financial stability. Unlike traditional business loans, these loans are structured to ensure repayment is manageable, minimizing cash flow strain on your business.
In this guide, we will answer the following questions and more:
What Are Bad Credit
Business Loans?
Bad credit business loans are financing options designed for small business owners with a minimum credit score below 600. These loans provide the necessary cash to keep businesses running, pay off existing debts, or cover short-term expenses. The loan terms typically do not exceed 18 months and often carry higher interest rates compared to other loan products, such as Merchant Cash Advances or Unsecured Business Loans. However, the borrowing amounts and repayment structures are tailored to make repayment manageable. Successfully repaying these loans can improve your credit score and set you up for future financing opportunities.
Max Funding Amount:
$1K - $5M
Factor Rates:
Starting at 1-6% per month
Term:
3 months - 5 years
Speed:
1-3 business days
These loans are structured to prioritize accessibility and repayment flexibility for business owners with less-than-perfect credit. The following products are among the best options for bad credit:
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Business Line of Credit
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Equipment Financing
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Merchant Cash Advance
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Working Capital Loans
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Revenue-Based Financing
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Invoice/Receivables Factoring
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Traditional business term loans and SBA loans are typically unavailable to those with bad credit due to their stringent requirements for high credit scores. In contrast, bad credit loans prioritize cash flow and sales volume over credit scores. For example, Merchant Cash Advances base loan amounts on monthly debit and credit card sales, while accounts receivable factoring and invoice financing place minimal emphasis on personal credit.
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Each product's repayment terms and borrowing amounts are customized to suit your cash flow cycles, ensuring manageable repayments.
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Bad Credit Business Loans – Research, Facts & Reports
Nearly 65% of medium and high-risk credit applicants received at least partial approval when applying to online lenders. (Source: 2023 Small Business Credit Survey)
55% of applicants stated that speed of credit decisions was their primary motivation. (Source: 2023 Small Business Credit Survey) Traditional lenders require a minimum personal credit score of 650 for approval, with most preferring 680 or higher. (Source: Experian)
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​Traditional lenders require a minimum personal credit score of 650 for approval, with most preferring 680 or higher. (Source: Experian)
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How Do Business Loans for
Bad Credit Work?
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Accessibility: A poor credit score won't prevent approval if your business has steady cash flow.
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Debt Consolidation: Funds can be used to pay off existing debts.
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Credit Building: Timely repayments establish a track record for future, more favorable loans. Flexible Usage: Funds can address various business needs, from payroll to inventory purchases.
Advantages of Business Loans with Bad Credit
Disadvantages of Business Loans with Bad Credit
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Higher Costs: These loans have higher interest rates and lower borrowing amounts compared to traditional options.
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Risk of Mismatch: Selecting the wrong loan product or repayment frequency could strain cash flow.
The speed of the approval process depends on the desired product and a business's financial health. Some products can be approved in under 24 hours, while others can take up to one week. Here's how to apply:
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Step 1: Choose the Right Product Bad credit business loans come in many forms. To choose the right small business loan, consider which borrowing terms pose the least risk for your cash flow. Is your business highly seasonal? Are you prone to occasional dips in revenue? Would a business line of credit or merchant cash advances help you build your business? It would be best to consider the funds' intended purpose since this directly affects how long it will take you to pay it back.
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Step 2: Gather Your Documents Depending on the bad credit business loans available, you may need the following documents and information:
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Voided business check
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Bank statements (3 Months)
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Credit card processing statements (3 Months)
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Accounts receivable aging report
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Accounts payable report
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Driver's license
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Step 3: Complete Application You can begin the application process by calling us or filling out our one-page online application. Either way, you'll be asked to enter the information from step 2 above, along with your desired borrowing amounts.
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Step 4: Speak to a Representative Once you apply, a representative will contact you to explain the repayment terms & percentage rate of your available small business financing options. This way, you won't have to worry about any surprises or hidden fees during repayment.
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Step 5: Receive Approval The bad credit business loan application process generally takes a few business days, depending on your chosen product. Once the file is approved and closed, a lump sum of funds should reach your checking account in 1-2 business days.
How to Apply for Bad Credit Business Loans
Your Business Loan Gets Set Up – Now What?
Bad credit business loans aren't just a way to get financing for your business. It's also an excellent opportunity to start building (or improving) your personal & business credit score.
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Regardless of the type of business loan you get, make all your required loan payments on time and in full. If you get business lines of credit or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your business credit score. And that means preferred rates and terms when you next need business financing.
After assessing your business's financial health, the lender may conclude that an approval decision for a business loan would do more harm than good to your cash flow. In this case, we might recommend another tool for financing your business, like a business credit card or personal loan. Business credit cards and personal loan options are usually much easier to qualify for than business loans. If you apply for business credit cards, you may not get the credit limit you need right away, but you can use business credit cards as a tool to increase your credit scores. Business credit cards will beef up your business credit history and help raise your business credit scores with regular use and consistent payments.
Credit unions are also an excellent avenue to pursue. Although credit unions may not always help, it's worthwhile to try and see what loan offers they can provide. To improve your credit score as much as possible before applying, you should consider these credit repair services. We can help you identify the issues that keep your credit score down and develop practical solutions for eliminating them. In addition, improving your credit score before applying can expand the business loan options you qualify for and get you better loan offers.
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Business Loan Product Comparison
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Loan Types
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Max Amounts
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Rates
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Speed​​​
Merchant Cash
Advances
$7.5K - $1M
​Starting at 1-6% p/mo
1-2 business days
Receivables/Invoice Financing
$10K - $10M
Starting at 1% p/mo
1-2 week
SBA Loan
​
$50K - $10M
Starting at Prime + 2.75%
8-12 weeks
Equipment
Financing
Up to $5M per piece Starting at 3.5% (SBA)
3-10+ business days
Business
Term Loan:
$10K - $5M
Starting at 1-4% p/mo
1-3 business days
Revenue-Based Business Loans
$10K - $5M
Starting at 1-6% p/mo
1-2 business days
Business
Line of Credit
$1K - $250K
Starting at 1% p/mo
1-3 business days
What If I'm Declined for Bad Credit Business Loans?
​Conclusion
Bad credit business loans provide a lifeline to small business owners with poor credit. While they come with higher costs, the ability to access financing, improve credit scores, and secure better terms in the future makes them a valuable tool. By selecting the right loan product for your business needs and cash flow cycle, you can ensure financial stability and set your business on a path to success.
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