With a 500 credit score, most term loans from banks and online lenders won't approve you, because they usually want 600 or more. The real options are: Merchant Fund Express, our recommended funder, which considers credit from FICO 500 and reviews sales and deposits; SBA microloans from community lenders; Grameen America if you're a low-income woman entrepreneur; and asset-backed loans such as equipment financing.
A term loan is money you receive all at once and repay in installments over a set period. With a low score, expect smaller amounts, shorter terms or a higher cost, and use every on-time payment to raise your score. Below we explain each option with data from official sources (checked October 2026).
Key takeaways
- Few term loans accept 500; many online lenders ask for 625 or more.
- Our recommended funder considers credit from FICO 500 and looks at sales and deposits, not just the score.
- SBA microloans go up to $50,000 with terms up to seven years; each lender sets its own requirements.
- Grameen America doesn't use credit history or collateral to approve its members.
- An asset as collateral (equipment or savings) offsets a low score.
- At 500, the goal is to get something affordable today and climb to 600–650 for the next offer.
The best options, ranked
- Merchant Fund Express (recommended funder). Considers credit from FICO 500 and approves based on your sales and deposits, not just your score. It offers $5,000 to $5,000,000, decisions often in 2 to 4 hours, and collateral isn't required in most cases. Better credit and stronger cash flow usually mean better offers, so at 500 expect tighter terms than at 650. Applying is free and doesn't affect your credit, it accepts applicants with an ITIN (no SSN needed) and it offers Spanish-speaking support.
- SBA microloans. The SBA funds nonprofit community organizations that lend up to $50,000 for working capital, inventory, equipment or furniture. The maximum term is seven years, and rates generally fall between 8% and 13%, according to sba.gov. The SBA doesn't set a minimum score: each lender decides, and many pair the loan with coaching. They can't be used to repay existing debt or buy real estate.
- Grameen America. Makes microloans to low-income women entrepreneurs using a group model instead of requiring collateral and credit history. It reports payments to Experian and Equifax, which helps build credit. You need to live in a community where it has a branch and form your group with people you trust.
- Equipment financing. When the loan buys a machine, a vehicle or an oven, that asset serves as collateral. That's why some equipment funders are more flexible on score than with an unsecured loan. Ask about the down payment: with low credit it's usually bigger.
- Credit union loan secured by savings. Some credit unions lend against a deposit of yours. The amount is small, but every on-time payment builds credit, and the relationship opens doors to larger loans.
- OnDeck, once you reach 625. Its published minimums are one year in business, a business checking account, $100,000 in annual sales and a 625 personal FICO. It's not for 500, but it gives you a concrete target: climbing about 125 points opens up online term loans with more choices.
Quick comparison
| Option | Credit | Amounts | Term | Collateral |
|---|---|---|---|---|
| Merchant Fund Express | From FICO 500 | $5,000–$5,000,000 | Per the offer | Not required in most cases |
| SBA microloan | Set by each lender | Up to $50,000 | Up to 7 years | Depends on the lender |
| Grameen America | Doesn't use credit history | Microloans | Per the program | Not required |
| Equipment financing | More flexible than unsecured | Based on the equipment | Based on equipment life | The equipment itself |
| Credit union, savings-secured | Flexible | Small | Short to medium | Your savings |
| OnDeck | 625+ | Based on your profile | Per the offer | Per the offer |
How we chose
We don't give ratings or scores. We compare speed, minimum time in business, minimum credit, acceptance of an ITIN or owners without an SSN, documents, amounts and collateral. On this page one question weighs most: does this option really accept someone at 500? If a lender doesn't publish that it does, we didn't list it as an option for 500. The full method is in how we rank business funding options.
For a comparison that also includes products that aren't term loans, like advances or revenue-based financing, see the best funding with a 500 credit score.
Which option fits your situation
- Your business sells and deposits well, but your credit took a hit from something in the past: start with a funder that looks at your sales. Your deposits are your best argument.
- You need less than $50,000 and can wait a few weeks: contact an SBA microlender in your area. Ask how they evaluate low credit and whether they offer free coaching.
- You're a woman with modest sales and trusted fellow entrepreneurs near a Grameen branch: the group model is built for your case.
- What you need is a machine or a vehicle: equipment financing is usually easier to get approved than an unsecured loan.
- There's no rush and you want to fix your credit first: a small savings-secured loan from a credit union, paid on time for a few months, can open much cheaper options.
A useful rule with low credit: your first financing doesn't have to be ideal, it has to be affordable. Taking an amount you can repay without missing is what gets you to the second offer, which will be cheaper. Missing a payment at 500 leaves you with fewer options than before. Applying with Merchant Fund Express is free and doesn't affect your credit, so you can see your real offer before deciding.
What funders look at instead of your score
At 500, your score won't help you, so everything else has to speak for you:
- Steady deposits: sales that land in the business account every week carry a lot of weight.
- Average balance: an account that doesn't hit zero every month shows control.
- Few returned payments: recent non-sufficient-funds charges shrink your options.
- Time in business: a two-year-old business with low credit is a better candidate than a three-month-old one.
- Why your credit dropped: if it was an illness, a divorce or a bad season you've moved past, explain it. A one-time cause is easier to understand than ongoing late payments.
- Current debts: if you already have several daily payments, new offers will be smaller.
Documents worth having ready: your last 3 to 6 business bank statements, your ID, your EIN or LLC paperwork if you have one, your most recent tax return and a short written explanation of why your credit dropped and what you changed. If you have signed contracts, confirmed orders or regular clients, include them: they're proof the money is coming in. Showing up organized conveys the seriousness your score doesn't. For more on this profile, read business loans with a 500 credit score.
How to go from 500 to a better offer in 6 to 12 months
- Pull your credit report and dispute errors. An account that isn't yours or a misreported payment can cost you many points.
- Pay everything on time starting today. Payment history is what weighs most in your score.
- Lower your card utilization. Using less of your available limit helps quickly.
- Take a small loan you can repay without fail that reports to the bureaus. Every on-time month adds up.
- Separate business finances with their own account and EIN, so the business starts building its own credit.
- Ask your suppliers to report. Some suppliers that give you net-30 terms report your payments to business credit bureaus. Ask which ones do and pay them first.
- Track your progress monthly. Many banking apps show your score for free; write down the number and what you did that month to see what works.
To understand the product itself in more depth, read our complete guide to business term loans.
Costly mistakes with low credit
- Paying upfront to someone who "locks in" a loan for you. Legitimate funders don't charge to apply.
- Applying at ten places at once with hard inquiries. Each hard inquiry can knock off a few points; look for options that don't affect your credit when you apply.
- Taking the maximum amount. With low credit, the cost is higher; borrow only what you truly need.
- Not reading the payment frequency. A weekly or daily installment can be harder to manage than a monthly one.
- Confusing an advance with a term loan. They're different products with different repayment rules.
Frequently asked questions
Can I get a business term loan with a 500 credit score?
It's possible, but options are few. Some funders consider credit from 500 if your business deposits steady sales, and community microlenders decide case by case. Most online lenders ask for 625 or more. Expect smaller amounts and have your bank statements ready.
Does Merchant Fund Express accept a 500 credit score?
Yes. Merchant Fund Express considers credit from FICO 500 and reviews your sales and deposits in addition to the score. Better credit and stronger cash flow usually bring better offers. It often decides in 2 to 4 hours, and applying is free and doesn't affect your credit.
Does the SBA lend with a 500 credit score?
The SBA doesn't lend directly or publish a minimum score for its programs. For microloans, each community organization sets its own requirements, and some work with low-credit owners alongside coaching. For the 7(a), the lender requires proof of creditworthiness, which is usually hard at 500.
How long does it take to go from 500 to 650?
It depends on why it's low. If there are errors on your report, fixing them can raise it quickly. If it's late payments or high balances, it usually takes several months of on-time payments and lower card use. There's no fixed number; check your report every month.
Is a term loan or a merchant cash advance better with low credit?
A term loan has fixed installments and is more predictable; an advance is based on your sales and easier to get approved, but usually costs more. If your sales are irregular, a payment set as a percentage of sales can be easier to sustain.