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The Best Business Loans for a 500 Credit Score

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Key takeaways

  • Many lenders state their credit score requirements, helping you narrow down small business loans for bad credit
  • Some loans focus less on your business credit history and more on future sales or revenue from invoices
  • Offering assets or collateral can make you less risky and improve your chances of approval with the lender

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.

Lender Best for Min. credit score Bankrate score
SBA microloans Affordable business loans 500, but sometimes there’s no credit requirement N/A
Fundible Low revenue requirement 450 4.7
Fora Financial Fast business loans 570 4.6
Bank of America Credit-building line of credit Not stated 4.3
Kiva Crowdfunding Doesn’t check credit 4.3
PayPal No-credit-check business loan None for working capital loans 4.2
Uncapped High-producing startups None;Relies on other business factors 4.1

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.

  • 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 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, 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 three 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.

Fundible also offers a business line of credit for business owners with personal credit scores of 580 and above. But this loan has a taller order for revenue, requiring at least $200,000 per year.

  • 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 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 working capital loan, line of credit or revenue advance, which is the equivalent of a merchant cash advance. Its loans offer wide-spanning loan amounts starting at $5,000 and going all the way up to $1.5 million.

You can find online lenders able 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.

  • 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’s lineup includes a variety of business loans built for different needs, from revolving loans to equipment loans to one-time term loans for designated purposes. 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.

  • 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 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 over 1.9 million lenders. Unlike traditional loans, Kiva business loans don’t charge any interest or loan fees. Kiva works best for microloans of $15,000 or under.

  • Kiva is light on the traditional eligibility requirements, relying instead on social credit — or 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 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.

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

    • Must have a PayPal business account
    • Working capital loan: No credit score requirement
    • Business loan: 580 personal credit score
    • Working capital loan: $15,000 in PayPal sales for a Business account or $20,000 for a Premier account
    • Business loan: At least $33,300 in annual revenue

Uncapped offers working capital funding and lines of credit through online lending. It relies on direct revenue reporting to approve its loans, rather than using your credit. Upon applying, you’ll connect your business bank account to the fintech lender 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.

  • 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

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.

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.

Bankrate insight

The best business credit cards are unsecured but require good-to-excellent credit. For business owners with bad credit, a secured business credit card requires a cash deposit but can help you build business credit over time.

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.

  • Short-term loan: A loan with short repayment terms, often for two years or less, with limited loan amounts
  • Business line of credit: Reusable credit that, once approved, you can draw from at any time
  • Microloan: A small loan offered as a conventional, alternative or SBA loan; SBA loans allow borrowing up to $50,000
  • Invoice financing: Financing approved based on a percentage of your outstanding invoices and repaid once the invoices are settled
  • Merchant cash advance: Financing approved based on future debit or credit card sales and repaid from a percentage of future sales
  • Secured business loan: If you have collateral to back the loan, lenders will take on less risk and be more willing to approve you for the business loan.

3. Shop around: Compare eligibility requirements and costs

Once you know your funding needs and you’ve narrowed down financing options, you can look for the best bad credit business loans available. Start by searching for loans and lenders that accept your credit score. 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.

Bankrate insight

Many lenders require you to have a business checking account to apply for a business loan. Having a business checking account separates your personal and business transactions, helping you and the lender fully understand your cash flow.

4. Find a co-signer

If your credit is too low and you’re getting denied business loans, you may be able to secure financing with a co-signer. 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.

Bottom line

Getting a business loan with a 500 personal credit score may take finding the right loan and putting your best application forward. 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.

  • 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.

  • 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.

  • 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.

  • Yes, startup loans tend to stay lenient in terms of credit requirements. For example, a lender may offer business loans with a minimum 600 personal credit score while accepting businesses with six months’ experience. Some lenders do offer startup business loans for a 500 credit score.

  • 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.

  • 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 loan approval, while merchant cash advances base approvals on your future credit and debit card sales.

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