How to get a start-up business loan with bad credit?

Did you know that about 10 percent of start-ups fail within the first year? And, 29 percent of them fail due to lack of sufficient funds and poor cash-flow.

Yes, you heard it correct!

You need sufficient funds not just to start your business, but enough funds to cover all expenses and continue operations through the first few years.

If you are starting a new business you might wonder, how to get a start-up business loan with bad credit?

The younger the start-up, lenders are increasingly unsure of investing their money. If somehow they form an opinion that the business will be doomed before the loan is recovered, then all the more reason for them to back off.  The risks Is much higher if there is a lower credit score involved.

Now the question is how to get a start-up loan with bad credit.

Well, you’ll have to look beyond traditional options. Obviously, you cannot stick to one type of funding to secure all the money for your start-up.

Let’s dig deeper to understand the various bad credit start-up business loans:

Alternative online lenders

Online lenders are famous low eligibility requirements. The below lenders may provide quick access to funding to your start-up as well as opaque terms and conditions that may result start-up business loan with bad credit and no collateral.

Kabbage – Need flexible access to working funds to reach your start-up goals? This organization provides direct funding to small business owners and consumers through its highly effective automated lending platform. Unlike traditional loan processing firms, this financial data and technology company has established its credibility by leveraging business data of consumers to process their loan requests.

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Small business funding options that fit your business. Qualify in 10 minutes for up to $250,000 line of credit

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Lendio – You can explore your start-up funding options with one of the leading business loan marketplace in the USA. If you want quick approval and access to a working capital and plenty of loan options to work with, then Lendio is probably your best bet. They boast of having a very streamlined application process that connects you to multiple lenders across the country in a jiffy. With a history of $8 billion in PPP loan approvals and $73,000 being an average size of a PPP loan funded through them, they are surely doing it right.

Ondeck – This New York-based financial technology company is known to exclusively support small businesses. Ondeck is a good match for you if you want short term loans, want to take out multiple short term loans, and you have a strong revenue but not a good credit rating. With an A+ rating with the Better Business Bureau, $13 billion delivered to businesses across the globe, and a super impressive rating of 4.9/5 on Trustpilot, this lending organization has a lot to offer when you are starting a business with no money and bad credit.

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A+ rating with BBB, 9.8/10 customer ratings at TrustPilot. Relaxed eligibility requirements and transparent Information for fast financing solutions

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Bluevine – Wondering how to get money to start a small business with bad credit and prefer to have flexibility in your choice of loans as well? Try out Bluevine. This lending organization understands that one size doesn’t fit all and hence it has funding options tailored for every start-up needs. What makes partnering with Bluevine a cakewalk is its quick and painless application process, flexible design, and dedicated advisors who will help you secure your start-up loan for small business. With $6.5 billion funds already delivered, 125,000 customers, and an A+ rating with the Better Business Bureau, you know who you are signing up with.

Credibly – Need fast and flexible financing for your business? Then, Credibly will be your best bet. This organization offers a host of small business financing options, for example, working capital loan of up to $400,000 for a 6 to 18-month term, merchant cash advances of up to $400,000 for an anticipated duration of 6 to 18-months, business expansion loans of up to $250,000 for various terms, among others. With an A+ rating with the Better Business Bureau, 4.9/5 on LendingTree Reviews, and $1 billion in small business financing, Credibly has already served more than 325 industries across the USA. With Credibly at your services, you can count on its highly experienced and dedicated team of professionals to create the next start-up success story.

Friends and relatives

You can check with your friends and relatives if they are interested to invest in your business. Most certainly, being your family and loved ones, they believe in you and will be willing to invest. But do not take it for granted and ensure you make them aware of the risks involved in the funding process.

Merchant cash advance

First things first, please do not mistake merchant cash advance or MCA for start-up business loans. In fact a merchant cash advance serves the purpose of immediate access to a working capital in exchange for your future income or a share of your sales. These loans are growing in popularity because they accommodate requests of starting a business with bad credit, especially those who venture into retail, restaurant or service businesses. The interest rates of an MCA can be as high as 38%, so you can only consider them as a short-term solution.


This has gradually become a popular choice for many entrepreneurs who are keen to launch their product or service.

If you are considering this option for bad credit start-up business loans, then there are a few types of crowdfunding you need to know:

  • Reward-based – This type of crowdfunding doesn’t involve any kind of reward or incentive for the person or group that is backing your business. Usually, this type is reserved for non-profits or some kind of community projects.
  • Donation-based – In this type of crowdfunding, a reward or incentive is involved for contributing to your business. It could be in the form of a product or service you offer, or a special gift.
  • Equity-based/ Securities – This type of crowdfunding allows backers to become partners in your business. It could be any form of financial reward that they must receive for making an investment in your company.


This is yet another option you can consider if you come from a minority or a disadvantaged background. You can get microloans or any financial assistance from a non-profit organization. Usually, this kind of assistance does not come with a clause of having a strong financial background, hence, having a bad credit will not necessarily serve as a hindrance in getting the required financial aid. The backers are not usually involved for any financial gains, they want to help struggling communities strengthen their financial positions and achieve their dreams.

Business credit cards

If you have a bad credit rating, and you are afraid that you will not be able to secure a traditional small business startup loan, then you might want to consider a business credit card. Most people usually overlook this aspect of a business credit card as a viable funding option, but it can actually be a good means of securing the credit to start a new business. The issuing authorities of a business card usually consider the applicant’s personal credit rating and not the credentials of a business.

While this may sound too good to be true for a new business owner who is just starting out, business credit cards are much more accessible than traditional modes of funding for a start-up.

Business grants

Have you considered small business grants? Unlike start-up loans, you do not need to worry about repaying back the invested sum. Qualifying for a small business grant can be a little more difficult than you imagine but definitely not impossible.

Consider approaching the federal or state governments who usually offer these grants to small businesses to kick start their venture and develop it into a full-fledged business. Though they are typically reserved for specific causes like medical or scientific research and conservation efforts, and industries that the government considers worth investing in, you may want to check if your start-up falls into any of those categories.

Financial technology companies

All thanks to mobile technology and boom in the fintech industry, you are now able to access these innovative funding organizations that work to make your start-up dreams come to reality.

Final thoughts 

The million dollar question remains whether getting a start-up business loan is possible with a bad credit. To state upfront, the answer may be a no.

But if you are a little creative in your ways, you will definitely figure out options to secure capital to start your venture.

If you cannot secure a traditional start-up loan without a credit check, establishing a credit score while making purchases from vendors that will help you build business credit,  or opting for a micro loan or using financial help from family or friends can definitely pave a smooth way to access funding for your business.

Let us know in the comments section below which option did you opt for to get funding for your start-up.



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