As with personal loans, it’s possible to get a small business loan with bad credit—scores as low as 580. However, you’ll have to demonstrate strong cash flow, and banks are more likely to require collateral to reduce the risk of lending. Small business borrowers with bad credit also qualify for less competitive rates and pay more in interest over the life of the loan. If possible, giving your business time to become more established can make qualifying for an affordable loan easier.
Traditional banks generally prefer a credit score of around 700 or higher for a small business loan. However, online lenders and credit unions might consider scores as low as 500. The specific requirements can vary significantly depending on the lender and your financial history.
There are a number of steps you can take if you’re denied a small business loan. First, try to find out why your application was denied. If your SBA loan application is denied, you’re entitled to a notice of denial that details the reasons; you may receive this directly from the SBA or from your lender. If, instead, you are denied a small business loan through an online lender or other financial institution, contact them to find out why you were not approved. They may be able to provide insight into how to improve your future approval odds. Once you know why your loan application was rejected, take steps to rectify the underlying issues. For example, you may need to improve your credit score, establish more consistent sales or reassess the amount you need to borrow.
Getting a small business loan may prove more challenging than other financing options like business credit cards. Although qualification requirements vary by lender, most lenders typically look at the business owner’s personal credit score and the business’ annual revenue. Many lenders require a minimum personal credit score of 600 to 660 and annual revenue between $100,000 and $250,000. We recommend confirming the qualification requirements with your preferred lender before applying.
The easiest way to get a small business loan may be through online lenders instead of traditional banks because borrower requirements may be more flexible. With an online lender, you may be able to quickly prequalify and get funding as soon as the same business day as long as you meet eligibility requirements.
Typically, lenders require businesses to have an annual revenue of between $100,000 and $250,000. If your business makes less than that, there are business loans for low-revenue companies that may offer funding options for your business.
¹The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
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Loans WriterKiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Lead Editor, Mortgages & LoansJordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Tom Thunstrom is a business loans expert and self-described "recovering banker" who currently serves Delaware's small business community as center director at the Small Business Development Center in southern Delaware. He has over 15 years of experience in small business finance and advising businesses on how best to grow and navigate a complex financial world.
As the Delaware SBDC is part of the University of Delaware, Tom occasionally guides student cohorts through collaborative projects with small businesses to help businesses answer key questions or develop a plan for growth.
In his work at the center, Tom works with a diverse range of businesses from agriculture to manufacturing, from beach-based businesses (Delaware has very nice beaches, by the way!) to logistics. He enjoys working with financial institutions and his team of business advisors to find creative ways to get a financing deal done.
Prior to the SBDC, Tom worked in management roles for regional and community banks in his native Minnesota and in the mid-Atlantic. He also worked for two nonprofits, navigating one through Covid and another through the Great Recession.
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