Small business owner looking worried.
If you have a low credit score, not all hope is lost in securing a small business loan, thanks especially to alternative lenders.

What a difference a decade makes, especially if you have poor credit and need funding for your small business. After the Great Recession of the late 2000s, it would have been much more difficult to secure a loan if you had a low credit rating.

But 10 years later, alternative online lending options are making it easier to acquire financing regardless of credit history. No longer are institutional banks the only game in town, which for the most part only zero in on your credit score.

And while it’s true that big banks are providing more loans these days, due to the current strong economy, you’re still more likely to be denied by a big bank if you have bad credit. 

On the other hand, alternative financing resources look at other factors besides FICO scores. For example, how long your business has been in operation, your earnings potential and revenue history are taken into consideration.

Need A Small Business Loan With Bad Credit? Get Kabbage

One of the most popular alternative small business loan funding sources is the website, Kabbage. There are no fees to apply for a loan at Kabbage, which takes 1/6th of the total loan amount for a 6-month term or a 1/12th of the total loan amount for a 12-month loan. In addition, there is also a monthly fee.

According to, the loans they grant do not operate off a traditional APR. Instead, Kabbage simply charges a monthly fee for the duration of the loan. Also, If you pay off your loan early, Kabbage will not charge you for an early payback penalty. In fact, if you do pay off the loan early, Kabbage will forgive all remaining interest expense, regardless of time left to maturity.

To get a loan from Kabbage, you’ll need to download their app. They offers lines of credit up to $250,000. On top of the 1/6th or 1/12th take Kabbage takes from the total loan amount, you also pay a monthly fee of anywhere from 1.5% to 10%. The more established and successful your business is, the lower the monthly fee amount you’ll pay. 

If you’re just getting started in business and have less than ideal credit, perhaps it’s not  ideal to pay up to 10% plus a portion of the total loan amount. But then again, you’d be hard-pressed to secure a loan from another source.

Getting Funded Is Fun, Even With Bad Credit

Kabbage isn’t the only alternative lender in town. Fundbox is another online option. And in only a few minutes or so, you can be approved for a small business loan, of up to $150,000. To get approved, you simply connect your accounting software or business bank account to give Fundbox insight into your business.

Fundbox will most likely approve you if your business has at least two months of activity in a supported accounting software, or three months of transactions in a business bank account. Ideally, says Fundbox’s website, your business generates a minimum of $50,000 in annual revenue.

Other Sources of Funding for Loans With Bad Credit

OnDeck, BlueVine, and StreetShares are three other sources of funding to consider if you have bad credit. All these sources basically operate on the same business model albeit with slightly different terms and lending requirements.

The good news is you don’t have to rely merely on big banks anymore to secure funding. You can still acquire a loan with a traditional bank if you want. To do so, consider joining a local credit union. Develop a personal relationship with a banker so you’re more likely to get approved. But beware, just because you have a charming personality doesn’t guarantee you’ll get approved. You’ll likely need to show the lender a convincing (or at least promising) P&L statement.

Consider upgrading to a best in class point of sale system (POS) with the loan you’ll be granted. Contact us today for a demonstration.

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