Finding funding with a low credit score is tough, but not impossible. We compare the best small business loans for bad credit: PayPal for microbusinesses, SBA 504 for long-term assets, and secured cards for rebuilding credit. Honest trade-offs, real numbers, no fluff.
If your credit score is below 680, most traditional banks will turn you away. But a low score doesn't mean your business can't get funded. Alternative lenders, secured products, and government-backed programs offer real paths to capital—you just need to know where to look.
Lenders evaluate risk. A low personal or business credit score signals higher risk, so they compensate with higher rates, shorter terms, or collateral requirements. The trade-off is straightforward: you pay more for access, but you get access nonetheless.
The key is matching the loan type to your specific need. Using a high-cost short-term loan to buy a building is a mistake. Using a revenue-based loan to cover a seasonal inventory bump can be smart.
Best for: Very small businesses and solopreneurs who need fast, small-dollar funding.
PayPal offers installment loans to businesses with credit scores as low as 580.1 Approval is based partly on your PayPal transaction history, so existing users have an edge. Loan amounts are modest (typically $5,000–$100,000), but funding can hit your account in minutes.
Apply for PayPal Business Loan →
Best for: Buying real estate, heavy equipment, or other major fixed assets.
The SBA 504 program is government-backed, which lets lenders offer long terms (10–25 years) and low down payments (as little as 10%). Credit requirements vary by lender but are generally more flexible than conventional commercial loans.2
Best for: Establishing or rebuilding business credit with disciplined monthly spending.
A secured card requires a refundable deposit (usually $200–$5,000) that becomes your credit limit. Use it for routine expenses, pay in full each month, and both your personal and business credit scores improve over time.
Explore secured business cards →
| Product | Credit Floor | Best For | Typical Cost |
|---|---|---|---|
| PayPal Business Loan | 580 | Microbusinesses, fast cash | Factor rates 1.1–1.5x |
| SBA 504 Loan | Varies (flexible) | Real estate, equipment | Fixed rates ~6–8% |
| Secured Business Card | None (deposit-based) | Building credit history | 0% if paid in full |
Bad credit loans are expensive. A factor rate of 1.3 on a $20,000 loan means you'll repay $26,000—often in under a year. Use them as a bridge, not a crutch. The real goal is to take the capital, grow revenue, and refinance into cheaper debt once your credit improves.
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