If your business has bad credit and you want a loan with fixed payments, here are your options by score: Merchant Fund Express, our recommended funder, accepts FICO 500+ and looks at your sales and deposits; Credibly publishes a 550 minimum; National Funding says most of its customers are at 600 or above; an SBA microloan is cheaper for small amounts; a secured loan can offset a low score; and OnDeck is your next step once you reach 625.
A term loan is money you receive all at once and repay in fixed installments over a set period. With bad credit, terms tend to be shorter and pricier, so the key is choosing the right amount and term, and using the loan for something that earns you money or heads off a bigger problem.
Key takeaways
- With low credit, your deposits matter as much as your score: three to six months of steady sales helps a lot.
- Credibly publishes working capital loans of $25,000 to $600,000 over 6 to 24 months, with a 550 FICO and 6 months in business.
- OnDeck says it doesn't offer "bad credit loans" and asks for a 625 FICO; treat it as a goal, not a starting point.
- Shorter terms and daily or weekly payments are common with bad credit: make sure the payment fits your slowest week.
- SBA microloans can't refinance existing debt, but they can fund working capital and equipment.
- Pay on time and, after a few months, ask for better terms based on your new track record.
The 6 best term loans for bad credit
- Merchant Fund Express (recommended funder). Best if your score sits between 500 and 600 but your sales hit the bank consistently. Amounts run $5,000 to $5,000,000, decisions often come in 2 to 4 hours and credit starts at FICO 500; with better credit and cash flow, offers usually improve. It reviews your sales and deposits, not just your score, and in most cases doesn't require collateral. Applying is free with no impact to your credit, Spanish-speaking support is available and ITIN applicants are accepted (no SSN needed).
- Credibly. Best for businesses with at least 6 months in operation, $20,000+ in monthly deposits and a 550+ FICO. Its working capital loan runs from $25,000 to $600,000 with terms of 6 to 24 months and automatic daily or weekly payments. It uses a soft pull when you apply (per its site, checked October 2026).
- National Funding. Best for scores around 600. It offers $5,000 to $500,000 for any business purpose, with no prepayment penalty, and says most of its customers have a FICO of 600 or higher. Checking options won't affect your credit. In some states it offers revenue-based financing instead of loans (per its site, checked October 2026).
- SBA microloan. Best for small amounts at a lower cost with coaching built in. It lends up to $50,000 through SBA-approved nonprofit community lenders that also provide technical assistance. According to the SBA, rates generally run 8% to 13% and the maximum term is seven years. Each microlender sets its own credit requirements, so ask directly.
- Secured loan with collateral. Best if you own an asset (a vehicle, equipment, a CD or real estate) and your score is what's holding you back. Banks like Bank of America offer secured business loans up to 5 years with collateral of your choice (per its site, checked October 2026). The risk: if you don't pay, you lose the asset.
- OnDeck. Not a bad-credit lender, and it says so: it asks for a 625 FICO, 1 year in business and $100,000 in annual revenue. Its term loan runs from $5,000 to $400,000 with terms up to 24 months (per its site, checked October 2026). We include it as a target: if you're at 560 today and pay well for a year, you may soon qualify for better terms.
Comparison table by credit score
| Option | Minimum credit | Time in business | Amounts | Term |
|---|---|---|---|---|
| Our recommended funder (#1) | FICO 500+ | Reviews sales and deposits | $5,000 to $5,000,000 | Depends on the offer |
| Credibly | FICO 550+ | 6 months | $25,000 to $600,000 | 6 to 24 months |
| National Funding | Most customers 600+ | Not listed in its overview | $5,000 to $500,000 | Flexible |
| SBA microloan | Set by the microlender | Varies | Up to $50,000 | Up to 7 years |
| Secured loan | Set by the bank | Varies | Depends on the asset | Up to 5 years (Bank of America) |
| OnDeck | FICO 625 | 1 year | $5,000 to $400,000 | Up to 24 months |
Data from each company's official site, checked October 2026.
How we chose
How we rank. No ratings and no points. We compare every option on the same criteria: speed, minimum time in business, minimum credit, whether it accepts an ITIN or owners without an SSN, required documents, amounts and collateral. Company facts come from each official site, and if we couldn't confirm something, we left it out. Read the full methodology in how we rank business funding options.
On this list we ranked mainly by how low your score can be and how realistic it is to qualify. A cheap loan that requires a 700 does nothing for someone sitting at 540 today.
What counts besides your score
With bad credit, funders look for other signs that you'll repay. The most important ones:
- Steady deposits. Sales coming in every week, with no zero months.
- Few negative-balance days. Frequent overdrafts worry underwriters more than a low score.
- Time in business. Six months opens some doors; a year opens more.
- Existing debt. If you already carry several advances or loans with daily payments, a new payment may not fit.
- Why your credit dropped. A rough patch that's behind you can be explained; a recent pattern of late payments is harder.
Before you apply, gather this: your last 3 to 6 months of business bank statements, ID, EIN, your company or DBA documents and a short explanation of what the money is for and why your credit fell. If you went through an illness, a divorce or a bad season that's over, say so with dates. If you have a new contract or signed orders, bring them: they show future revenue. And pull your own credit report before the funder does. If there are errors, dispute them, because removing an account that isn't yours can raise your score for free.
For a deeper look, read bad credit business loans: what to know before applying.
Term loan or cash advance with bad credit?
With bad credit you'll be offered two things that look alike: a term loan with fixed installments and a merchant cash advance that you repay with a percentage or a fixed amount of your sales. The main differences:
| Term loan | Cash advance | |
|---|---|---|
| Payment | Fixed installment | Fixed or tied to sales, often daily or weekly |
| Cost | Interest rate | Fixed factor on the amount you receive |
| Paying early | May save interest (read the contract) | Usually doesn't reduce the cost |
| Minimum credit | Somewhat higher | Usually more flexible |
If your sales are stable, a term loan is usually more predictable. If your sales swing a lot, a payment that flexes with revenue can hold up better in slow months. Compare both in merchant cash advance vs. short-term loan.
Expensive mistakes to avoid
- Applying everywhere on the same day. Several hard inquiries drag your score down further. Start with soft-pull options.
- Taking the maximum you're offered. With bad credit, money is expensive; borrow only what you need.
- Believing in "sure approval." No serious funder promises approval before reviewing your file. Be wary of anyone who asks for an upfront fee to "approve" you.
- Not using the loan to rebuild credit. Paying on time is the fastest way to improve. Ask whether the funder reports to business credit bureaus.
- Ignoring the term. A term of a few months means big payments. Make sure the payment fits your worst week, not your best.
Our recommendation
If you can wait and the amount is small, ask an SBA microlender first: it usually costs less. If you have an asset to pledge, a secured loan may get you a better rate.
If you need the money soon and your sales are steady, our recommended funder is Merchant Fund Express: it accepts credit from FICO 500, reviews your deposits and offers Spanish-speaking support. You can apply online; it's free and won't affect your credit. For the full picture, see the best bad credit business loans. Prefer Spanish? Leer en español.
Frequently asked questions
What credit score do I need for a business term loan?
It depends on the funder. Our recommended funder accepts FICO 500+, Credibly publishes 550, National Funding says most of its customers are at 600 or higher and OnDeck asks for 625. Banks usually want more. Beyond the score, every funder looks at your sales, your deposits and your existing debt before making an offer.
Can I get a business term loan with a 520 credit score?
It's possible, but you'll have fewer options. At that score, your deposits and time in business carry a lot of weight. Merchant Fund Express accepts FICO 500+ and reviews your sales. Expect a shorter term and a higher cost, and borrow only what you can comfortably repay from your slowest weeks.
Will a bad credit loan help me raise my score?
It can, if the funder reports your payments to the credit bureaus and you pay on time. OnDeck, for example, says it reports to business credit bureaus. Ask each funder whether it reports and to which bureaus. One late payment can erase months of progress, so set up reminders or autopay.
Do I need collateral if I have bad credit?
Not always. Our recommended funder doesn't require collateral in most cases. A secured loan does, in exchange for better terms. Almost every funder asks for a personal guarantee from the owner, so read it carefully before you sign and understand what you're personally on the hook for.
How long does a bad credit term loan take?
With online funders, the decision can come the same day; our recommended funder often decides in 2 to 4 hours. An SBA microloan or a secured bank loan takes weeks. Having your bank statements ready speeds everything up, no matter which option you choose.
Can I refinance to a better rate later?
Often, yes. If you pay on time for several months and your score rises, you can ask for better terms or move to a bank. Before signing, ask what happens if you pay early: some loans save you interest when you do and others don't.