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.
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.
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.
Prepare a clear business plan with financial projections
Gather personal and business bank statements
Offer collateral or a personal guarantee if possible
Apply with community or SBA-backed lenders
Build business credit with smaller accounts first
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.
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
❌ 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
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.