Best Business Loans for Startups With Low Credit Scores

Starting a business is challenging enough — and if you have a low credit score, it can feel almost impossible to get funding. Traditional banks often reject applications from new entrepreneurs or anyone with imperfect credit. But here’s the truth: you can still qualify for startup business loans even with a low credit score — you just need to know where to look.

This guide breaks down the best business loans for startups with low credit scores, what lenders look for, and how to boost your approval odds in 2025.

Why Low Credit Doesn’t Have to Stop You

While banks often require credit scores above 680, alternative and SBA-backed lenders consider additional factors like cash flow, time in business, and collateral. Even with a credit score under 600, there are financing options that can help you launch or grow your business.

By demonstrating consistent revenue, industry experience, or a strong business plan, you can still access funding to cover startup costs, inventory, equipment, or working capital.

Best Business Loan Options for Startups With Low Credit

Here are the top funding solutions available in 2025 — ranked by accessibility, speed, and flexibility.

1. SBA Microloans

The SBA Microloan Program offers up to $50,000 through nonprofit intermediaries. These loans are designed to help startups and small businesses that may not qualify for traditional financing.

• Credit requirement: 575+ typically acceptable

• Loan amount: Up to $50,000

• Interest rate: 8%–13%

• Terms: Up to 6 years

• Pros: Ideal for startups and disadvantaged borrowers

• Cons: Requires a strong business plan and may take time to process

Best for: New entrepreneurs who need smaller funding amounts and mentorship.

2. Community Development Financial Institutions (CDFIs)

CDFIs are nonprofit lenders that focus on underserved communities and entrepreneurs with low or no credit. They often provide flexible underwriting, business coaching, and affordable terms.

• Credit requirement: Often as low as 550

• Loan amount: $5,000–$250,000

• Interest rate: 6%–12%

• Terms: 1–10 years

• Pros: Personalized support and high approval odds for new businesses

• Cons: Loan sizes may be limited

Best for: Minority-owned, women-owned, and rural startups.

3. Online Lenders and Fintech Platforms

Modern online lenders use cash flow, revenue, and alternative data instead of relying solely on credit scores. These lenders provide fast funding — often within 24–72 hours.

• Examples: Fundbox, OnDeck, BlueVine, Credibly, and Lendio

• Credit requirement: 500–600 minimum

• Loan amount: $5,000–$250,000+

• Interest rate: Varies (typically 15%–35%)

• Pros: Fast approvals and low paperwork

• Cons: Higher rates for poor credit

Best for: Startups with consistent revenue or strong sales potential.

4. Business Credit Cards for Startups

If your startup expenses are small and manageable, a business credit card can serve as a revolving line of credit while helping you build your business credit profile.

• Credit requirement: 580+ (secured cards may accept lower)

• Limit: $2,000–$25,000+

• Pros: Builds business credit, flexible payments, potential rewards

• Cons: Higher interest rates if balances carry month-to-month

Best for: Covering everyday business expenses and improving credit over time.

5. Merchant Cash Advances (MCAs)

A merchant cash advance provides quick funding based on your projected credit card or sales revenue. It’s easier to qualify for but comes at a higher cost.

• Credit requirement: 500+

• Funding amount: $5,000–$250,000

• Pros: Fast funding (often same day) and flexible repayments

• Cons: High fees and daily deductions from sales

Best for: Startups with steady card or e-commerce sales.

6. Equipment Financing

If you need to buy machinery, vehicles, or other equipment, equipment financing is one of the most accessible options — even with poor credit.

• Credit requirement: 550+

• Loan amount: Up to 100% of equipment value

• Pros: Equipment serves as collateral, easier approval

• Cons: Limited to equipment-related expenses

Best for: Construction, manufacturing, or logistics startups.

7. Personal Loans for Business

If you’re just getting started and don’t have business revenue yet, a personal loan may be a temporary solution.

• Credit requirement: 580–650

• Loan amount: $5,000–$100,000

• Pros: Quick approval and flexible use

• Cons: Puts personal credit at risk

Best for: Solo entrepreneurs or pre-revenue startups.

Steps to Qualify for a Startup Loan With Low Credit 

1. Prepare a clear business plan with financial projections

2. Gather personal and business bank statements

3. Offer collateral or a personal guarantee if possible

4. Apply with community or SBA-backed lenders

5. Build business credit with smaller accounts first

Tips to Improve Your Loan Approval Odds

Even with a low credit score, you can strengthen your loan application by:

• Showing consistent cash flow: Demonstrate steady deposits and revenue trends.

• Adding a co-signer: A partner with good credit can improve approval odds.

• Securing collateral: Equipment, vehicles, or savings reduce lender risk.

• Building a relationship with a local lender: Community banks and CDFIs often lend based on trust and business potential.

• Starting small: A smaller initial loan can help you establish repayment history.

Alternative Funding Options

If loans are out of reach, consider these alternatives:

• Crowdfunding platforms (Kickstarter, Indiegogo, Wefunder)

• Grants for small businesses (especially for minority, women, or veteran-owned startups)

• Friends and family financing

• Invoice factoring for B2B startups with contracts

• Microloans from nonprofit organizations like Accion Opportunity Fund or Kiva

Common Mistakes to Avoid

• ❌ Applying to too many lenders at once — it can lower your credit score

• ❌ Ignoring interest and fees — some short-term loans can exceed 30% APR

• ❌ Skipping a written business plan — even alternative lenders want to see a clear purpose

• ❌ Overborrowing — take only what you can repay comfortably

Conclusion: Funding Is Still Possible — Even With Low Credit

Having a low credit score doesn’t have to end your startup dreams. By focusing on microloans, CDFIs, and fintech lenders, you can access the funding you need while improving your credit over time.

Start small, repay responsibly, and build your business credit — every on-time payment moves you closer to better rates and higher limits.

Remember: It’s not about where your credit score is today — it’s about where your business will be tomorrow.