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If you’ve ever tried to get a personal loan, line of credit, mortgage, car loan, or small business loan with bad credit, you know how difficult it can be. 

A poor credit score can mean many options for credit and loan products can be off the table. That can be a fatal problem when it comes to small business funding.  Small businesses rely on having access to funds for working capital, purchases, expenses, expansion, operations, and growth. Bad credit can put a serious damper on those activities, and be the death knell for many small businesses.  It’s a vicious cycle – you can’t access credit or loans because of bad credit, but without accessing those products, it can be hard to improve your credit score.  Very frustrating!

However, there are options for small business funding that can work, even with bad credit.  In this article, we’ll highlight bad credit business loans, which are often available from alternative, non-bank lenders, even for bad credit customers.  We’ll also look at several other types of bad credit business financing options, that are a little outside the box compared to small business loans, but may provide the capital you need to pay bills and improve your credit score, so that you can access more lucrative small business funding options in the future.  

Bad Credit Business Funding: Microlenders, Crowdfunding, and More

Even if you cannot qualify for a larger small business loan or bad credit business loan, you may be able to qualify for business funding from microlenders or crowdfunding sites.  The amounts available will vary considerably depending on the company and/or platform you choose. However, many of these sites do not require a credit score, or have credit score requirements that are easily attained, even by those with bad credit.  

Crowdfunding in particular can offer some unique advantages for the right kinds of hip and trendy companies, and often raise a ton of money without any consideration for credit score, cash flows, and other business metrics.  This can be a bit hit or miss though in terms of a reliable small business funding method, and depends on your product or service, virality, and what you offer online backers in return.  

Microlenders are a more stable and less public/crowd-based method of business funding, but one that can be very useful for improving your bad credit situation.  Some offer microloans that are reported to the credit bureaus, too, meaning by taking out and repaying a relatively small loan, you get money you need, and improve your credit score at the same time.  

Bad Credit Business Funding: Borrowing or Gifts from Friends, Family, and Associates

While it’s always risky to mix money with friendship or family, asking for gifts or borrowing money from friends, family, and associates is often the last resort small business funding option.  Many small business owners with bad credit might need a helping hand from time to time, and gifts or borrowing from friends and family can often serve that purpose. It can help small business owners to pay their bills and pay off their debts, to improve their credit score, and make it possible to borrow from actual lending firms in the future (such as obtaining a bad credit business loan).  

Just a note of caution here, though.  Be sure to draw up paperwork and get signatures and make loans official.  Even gifts are best clarified, in writing, as gifts. This will help avoid your business funding turning into a source of litigation with friends or family in the future.  Because that doesn’t help anyone, and is probably the last thing that responsible business owners want to get involved with.  

Bad Credit Business Funding: Venture Capital, Equity Partners, and Similar

If you are looking for business funding with bad credit, borrowing money may be outside the realm of possibility.  That doesn’t preclude you from seeking funding from a venture capital or investment firm, or trying to find equity partners – either individuals or companies – to buy into your business.  Under these kinds of business funding arrangements, a firm or individual offers a lump sum of cash, line of credit, or other small business funding, in exchange for gaining a portion of ownership over the business.  This will entitle them to a percentage of profits in the future, and some degree of control or decision-making input in most cases. These kinds of deals are common, but should be carefully considered, as small business owners can be trading away big future dollars for short-term cash.

Bad Credit Business Funding: Bad Credit Business Loans and Products from Online Lenders

Finally, one of the most popular and lowest risk options for business funding with bad credit is a loan.  Specifically, bad credit business loans. They work just like a normal small business loan, but are designed with qualification criteria that make them easier to obtain than traditional loan products.  In most cases, banks and financial institutions don’t offer this kind of service. These loans are usually available from non-bank, alternative lenders, many of whom operate online. The financial crash and tightening of credit markets in the late 2000s resulted in many new private small business funding and lending firms popping up to fill this role in the market.  

One such lender is BizFly Funding.  They’re one of the premiere online small business funding companies in the US.  They deal only in small business funding, with a range of products and options available, including options for bad credit business loans.  These have very low credit score requirements, minimal time-in-business requirements, and reasonably low monthly revenue requirements in order to qualify.

 At the same time, more small businesses choose BizFly Funding for all the other benefits that they offer.  The application process can be completed online, and approval can happen the same day. Funding can usually be available within 1 business day, with amounts on some products up to $1 million.  Business funding, even with bad credit, has never been easier than with BizFly Funding. Bad credit business loans, small business loans, merchant cash advances, lines of credit, and more are all available.