Top 10 Business Loans for Bad Credit

    

            Starting and running your own business can be difficult, especially if you have bad credit. If you have less-than-perfect credit, it can make it much more difficult to acquire the capital that you need to make your business grow. Fortunately, there are plenty of business loans out there designed to help you out even with poor credit, so if you need help finding a vendor loan, here are the top 10 options available to help you get started and keep your business afloat in the process.

1) Vender Notes

The Best Small Business Loans for Bad Credit for 2022

            Vendor loans are short-term business loans that companies can get from a bank or a lender and they’re issued when they don’t have enough money to purchase goods or services. These vendor loans usually come with an extremely high interest rate, meaning your business needs to pay back these funds immediately in order to avoid getting into debt. Business loans are intended for startups, but it's also possible to borrow money from other sources (including friends and family) without going through a lending institution. However, most lenders require borrowers to have good credit scores and a history of paying back debts on time before issuing any kind of loan.

2) Invoice Discounting

            Invoice discounting is another business loan option, often seen as a last resort by many businesses. Invoice discounting companies offer credit that’s secured against your company’s outstanding invoices. In other words, they provide you with immediate cash in exchange for selling some of your current receivables at a discount. While invoice financing may seem like a good idea, it’s actually not that different from any other short-term loan—just be sure to consider all of your options before choosing invoice financing.

3) Equipment Financing

The Best Small Business Loans for Bad Credit for 2022

            Equipment financing can be a great option for business owners, particularly when it comes to purchasing larger items like trucks and machinery. In most cases, equipment is delivered directly to your door, which means you don’t have to pay for shipping or freight charges. Equipment financing is less common than loans or lines of credit but usually carry lower interest rates and fees. When comparing loan offers from different vendors, look closely at factors like monthly payments and total interest costs—it might be worth paying more per month if you can save on overall costs by borrowing over longer terms.

4) Factoring

            Factoring is an alternative to traditional financing where you sell your accounts receivable (credit invoices) at a discount. In other words, you sell money before you have actually received it. The factoring company gives you cash in exchange for a percentage of what your customers owe (generally 80% or less). That money can be used to pay bills, grow your business and build credit while keeping control of your existing accounts receivable. In essence, factoring allows companies with not-so-perfect credit histories to access funds when they need them.

5) Merchant Cash Advance

The Best Small Business Loans for Bad Credit for 2022

            A merchant cash advance, also known as a working capital advance, is a short-term loan made to small business owners with good credit ratings. It's not collateralized by inventory or receivables and must be repaid in full out of business revenue within six months to a year. A merchant cash advance allows business owners to free up cash flow while they wait on customers to pay their invoices. It can provide financial relief when unexpected costs arise during daily operations or when extra money is needed to purchase equipment or supplies. In other words, it's a quick and easy way to get cash right away, which helps prevent you from taking out a high-interest payday loan instead.

6) Bill Consolidation

            Did you know that some online lenders actually offer business loans for bad credit, too? It’s true! Vendor loan programs, unlike business loans for bad credit, provide working capital to small businesses with little to no security. Business owners can request up to $100K in a vendor loan program and apply online via mobile or desktop. Requesting a loan isn’t hard – in fact, it’s as easy as answering a few questions about your business and then requesting an instant approval decision from your lender. If you do not get approved by one lender, just check out other options until you find one that meets your needs. How cool is that?

7) Bankline of Credit

The Best Small Business Loans for Bad Credit for 2022

            If you are self-employed or have a small business, your banking options will be limited. Your bank might offer some products targeted to small businesses and entrepreneurs, but they’re probably not geared toward everyday financing. If you’re in need of working capital or other credit lines you’ll want to look into a third-party vendor loan. Most vendors offer flexible financing products designed with microbusinesses and start-ups in mind. Whether it’s short-term working capital or one of their standard lines of credit, these vendor finance programs can get your business up and running quickly. Unlike traditional lenders that may require collateral, vendor financing is based on your company's cash flow—which means there are no down payments involved!

8) Commercial Real Estate Loan

            One of many types of real estate loans is a commercial real estate loan. This type of loan is made available to business owners who need to purchase or refinance properties that are designed to earn revenue, such as office buildings, retail spaces and industrial warehouses. The property’s value serves as collateral, so you can take out a loan up to 80 percent of its total value. The repayment term can vary from a few months up to several years. For example, a commercial mortgage could have an amortization period (or repayment schedule) that lasts for 30 years. If you have bad credit and little money saved in your bank account, then consider taking out commercial real estate loans in order to get some needed capital when starting your business.

9) Bridge Loan

            While working to build your credit, you might need some extra capital to get past a hurdle. A bridge loan can help until you qualify for better financing in several months. These loans are usually around $5,000 and have shorter terms of 6 or 12 months. They typically come with high interest rates and strict payment plans. But they can be a great way to access cash while building your business credit and avoiding fees from late payments and declined cards. Bridge loans can also help increase your chances of qualifying for lower rates on future financing options. If you’re looking to buy new equipment or inventory but don’t want to put those assets on your business credit card, bridge loans could be a good option.

10) Term Loan

            A Term Loan is a loan that is made over a specified period of time. It can be repaid in installments or one lump sum at maturity depending on how it is designed. The repayment terms of a term loan are agreed upon by both parties (borrower and lender) prior to entering into an agreement; if you have had experience with any type of business loan then you already understand that. Because Term Loans are set up with repayment terms, they tend to be more stable than other business loans such as lines of credit.