Having a bad credit score immediately sets off a red flag for a lender. A low credit score can mean that you have poor money management skills and/or have fallen into major debt. Lenders see both of these situations as riskier than persons with good credit, as they believe you are more likely to default on the loan.
Scores ranging between 300 and 629 are considered bad by FICO. When you have trouble getting approved for traditional business loans, you may have to turn to alternative lending sources to get the funding you need. Alternative sources are more likely to grant you funding based off of the successful history of your business rather than your personal credit score.
Credit Scores Under 500
With a credit score this low, it’s best to look for lenders that don’t check a credit score for approval. The majority of lenders will require a minimum credit score to apply, but some don’t. Fundbox and Kabbage are two companies that don’t base funding decisions off of a business owner’s credit score.
You can get a loan up to $100,000 with either company. Kabbage is more like a traditional lender that offers a line of credit. They require that borrowers have a business that is at least one year old and makes $50,000 in annual revenue. You can expect an APR between 16.4 and 76.5 percent. Fundbox is an invoice factoring company that allows you to borrow the amount of outstanding invoices that you have. You can get APRs that range between 24 and 99 percent.
Credit Scores Above 500
Kabbage is still a viable option for those looking for lines of credit. BlueVine is another option that services those with a credit score of 530 or higher. They will lend from $20,000 to $2 million depending on the number of outstanding invoices that you have. BlueVine requires that you be in business for at least 3 full years and make at least $120,000 in annual revenue. You can expect APRs between 17 and 60 percent.
Credit Scores Above 600
If your credit score is at least 600, you can qualify for business funding from StreetShare and BlueVine. StreetShares is a traditional business loan that you can qualify for amounts between $2,000 and $100,000. You can expect between 9 and 40 percent APRs. For approval from StreetShares, you must be in business for at least a year and bring in over $25,000 in annual revenue.
BlueVine offers lines of credit for those with a credit score over 600. The borrowing amounts are between $5,000 and $100,000. The APRs range between 16 and 62 percent. To qualify for this type of loan you will need to be in business for at least 6 full months and bring in over $60,000 in annual revenue.
As you can see, borrowing funds for your business can be costly with a lower credit score, but it’s still doable. It’s always a good idea to work on improving your credit score in the future so that you can have access to more funding options at lower percentage rates.