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The maximum interest rate for bad credit business loans ranges from 10.50% to 75% or more, and is higher than the average business loan rate, offering 8-9% interest. Lenders tend to offer high interest rates to bad credit borrowers in order to increase the risk of defaulting their loans. However, interest rates vary widely based on lenders, markets and credit profiles, so you cannot give an average fee for a bad credit business loan.
Let’s dig into the common bad credit business loan fees and lenders that offer these types of loans.
Compare current interest rates for bad credit business loans
As a poor credit borrower, you probably don’t qualify for the lender’s minimum interest rate. Instead, you’ll want to compare multiple loan offers to find the lowest interest rate you’ll be charged based on your credit profile.
Consider the maximum business loan fees charged for different types of bad credit business loans.
| Loan type | Average maximum rate |
|---|---|
| Period loan | Interest rate: 75.00%+; Factor rate: From 1.10 |
| Credit business line | Interest rate: 60.00%+ |
| Equipment Loan | Interest of 25% or more |
| SBA Loan | Fixed interest rate: 12.50% to 15.50% Variable interest rate: 10.50% to 14.00% |
| Invoice factoring/Funding | 0.5% to 4% of the invoice |
| Merchant Cash Advanced | Factor rate: 1.04-1.30 |
Factors that influence the rate of defective credit business loans
The following factors can affect business loan fees due to bad credit:
- Cash flow. Having enough revenue or cash in your hands can indicate financial stability and lead to lower interest rates than if the profit margins were severe.
- Credit score. Fair or poor credit indicates that lenders have difficulty managing their finances and debt, but it does not necessarily disqualify you. When using personal credit scores, many lenders operate with credit scores of 600 or higher. 500s scores offer limited business loan options. While low, a business credit score of 49 is better than 20.
- Current market. In some cases, the credit environment is strengthened for economic reasons. Lenders then prefer more dangerous borrowers and denies more credit applicants than a strong economy.
- Lender. Some lenders specialize in loans for bad credit borrowers, while others have minimized lending to this group. It all depends on the balance that lenders want to maintain in their loan portfolio.
- Business time. Lenders want to see anywhere in business for six months to two years. The more established your business, the more financially your lender will make your business more stable.
- Payment history. If your business credit has recently immersed due to an unexpected situation, your lender may take into account your preferred payment history.
How to compare business loans for bad credit
Be wary when comparing key features of a loan, as interest rates and fees are already high, even the best credit business loans. What to look for:
- April. Business loans usually show annual rates. This reflects the annual cost of a loan, including some fees. Look for loans that offer the lowest APR for your credit profile.
- Factor rate. Some business loans with bad credits earn a factor fee in place of APR and multiply the entire loan amount by factors such as 1.10 or 1.50. Factor rates do not include fees and are often converted to APRs higher than traditional interest-bearing loans.
- Fee. In addition to these common business loan fees, there are several fees associated with the business loan due to bad credit.
| commission | What is that for? |
|---|---|
| Closure fee | You will be charged by some lenders to finalize your loan agreement |
| Discounted or factoring rates | Invoice factoring fees that charge a one-time percentage of unpaid invoices, weekly or monthly expenses |
| Late payment fee | You will be charged when you missed your loan repayment to restore your loan to good condition |
| Origination fee | Fees to commence a loan and confirm your loan application |
| Prepaid penalty | Fees charged when the business pays the full loan prior to the repayment schedule |
| Ending fee | You are billed to factorize your invoice or close your merchant’s cash advance account |
- Loan amount. Lenders tend to reduce the amount of loans to bad credit borrowers. If you need a high loan amount, such as $250,000 or $500,000, you need to find a lender who is willing to lend that amount.
- Repayment terms. You may need to pay off your loan on a short timeline, such as 6-24 months.
Examples of loan costs
To find the most affordable loans, shop and compare interest rates, total costs and repayment terms. You can use these examples or our business loan calculator to know how much you will pay for your business loan.
Use these examples or our business loan calculator to understand how much you will pay.
| Loan amount | APR or Factor Rate | Repayment period | Monthly payment | Total Interest |
|---|---|---|---|---|
| $100,000 | 36% APR | 5 years | $3,613.30 | $116,797.75 |
| $100,000 | 50% APR | 2 years | $6,671.08 | $60,105.86 |
| $100,000 | 1.50 coefficient rate | 2 years | $6,250, no fee included | $50,000 |
Compare lenders with bad credit business loans
Lenders set their own standards for how much risk they take when lending to a poorly credited business owner. See how bad credit business loan rates and features change across the market.
Period loan
Delinquent Credit Business Terminology Loans often have low loan amounts and short repayment terms. Compare lenders with their poor credit business loan rates.
| Lender | interest rate | detail |
|---|---|---|
| Outside | It has not been stated | The loan amount ranges from $5,000 to $1.5 million Up to 18 months requirement No collateral required |
| Nationwide funding | From 1.10 coefficient | Loan amounts range from $5,000 to $500,000 Terminology for up to 24 months |
| ondeck | 57.9% Average APR | The loan amount ranges from $5,000 to $250,000 to 24 months. Quick funding on the same day Terminology for up to 24 months |
| PayPal | Flat rate, not disclosed | Loan amounts ranging from $5,000 to $150,000 17-52 weeks Weekly payments |
| Taycor Financial | 1.10-1.40 Coefficient Rate | The loan amount ranges from $10,000 to $1 million Terminology for 4-60 months Personal guarantee is required |
| Triton Capital | 8.99% to 74.99% | Loan amounts range from $10,000 to $250,000 3– Up to 24 months’ requirements Daily, weekly, or monthly payment schedule |
Credit business line
The business line tends to have lower loan amounts than other loans, especially if your business has a risky credit history. See the features of the business line from these bad credit business loan lenders.
| Lender | interest rate | detail |
|---|---|---|
| Blue Vine | From 7.80% simple interest | The maximum loan amount is $250,000 Terminology for 6-12 months No origin or advance fee |
| Reliable | Monthly fees from 3.00% to 5.00% | The loan amount is up to $600,000 Quick funding on the same day |
| Fundbox | Weekly rates ranging from 4.66% to 8.99% | The loan amount ranges from $1,000 to $150,000 12-24 weeks |
| Rendio | 8.00% to 60.00% | The loan amount ranges from $1,000 to $250,000 Maturity date of 6-24 months Accepting startups |
SBA loans for poor credit
SBA loans are partially guaranteed by US Small Business Administrators and are designed to support businesses that are not eligible for traditional funding. Specifically, SBA microloans often lower the credit criteria required for a 500 credit score, or lower the non-credit credit criteria, so they do work well for bad credit borrowers. If you are looking for an SBA loan, try one of these lenders.
| Lender | Credit score required | detail |
| creditfy | 600 | 90% application approval rate You can fund it within a few weeks Accepting 6 months of business |
| Ibusiness Funding | 640 | Low annual revenue of $50,000 There will be no personal bankruptcy within 7 years |
| SMB Compass | 650 | Low interest rates starting from 6.25% Three years in business, annual revenue costs $500,000 |
| Live Oak Bank | 650 | Second largest origination for SBA 7(a) loans Specializing in SBA loans |
Equipment Loan
Your business qualifies for equipment loans with higher loan amounts and longer terms, as this is a safe type of loan. The loan is protected by equipment as collateral, reducing the risk that the lender will offer you a loan. Some lenders also offer flexible repayment schedules, such as quarterly and seasonal.
What you can expect to find in the market:
| Lender | interest rate | detail |
|---|---|---|
| SMB Compass | From 5.99% | The loan amount ranges from $25,000 to $5 million Conditions up to 10 years |
| Taycor Financial | 6.75% to 40.00% | The loan amount ranges from $500 to $2 million Terminology for 24-84 months No down payment required Flexible repayment schedule |
| Triton Capital | 5.99% to 24.99% | Loan amounts range from $10,000 to $250,000 Terminology for 12-60 months Just one day’s funds Preapprovals is appropriate for 90 days |
| Nationwide funding | From 4.99% simple interest | No down payment required The maximum loan amount is $150,000 Terminology for 24-60 months |
Invoice factoring or funding
With Invoice Factoring, you can sell unpaid invoices to a factoring company that collects invoices in exchange for fees. Invoice Financing uses unpaid invoices as collateral to pay when clients pay their invoices.
Not all lenders provide invoice factorization or financing, so look at the key features of a few lenders using this product.
| Lender | Fee | detail |
|---|---|---|
| Reliable | 1.11 Factor Rate | It’s up to $600,000 Funding in just 24 hours |
| Rendio | 3.00% price | Conditions up to 1 year Advance up to 90% of unpaid invoices |
| SMB Compass | From 12.00% interest rate | Loans range from $25,000 to $10 million Fast funding up to 24 hours |
Merchant Cash Advanced
Merchant Cash Advances (MCAs) provide advances in funds to be repaid on future debit or credit card sales. This type of loan comes with generous eligibility criteria, but is a critical fee that can usually lead to an APR of 100% or more. We recommend using this loan for emergency funds.
Check the rates these bad credit lenders offer in the MCA.
| Lender | Factor rate | detail |
|---|---|---|
| Reliable | Factor rate from 1.11 | It’s up to $600,000 Terminology for 3-24 months |
| Rendio | 18.00% interest | Get $5,000 to $2 million Up to 3 years requirement |
| Outside | It has not been stated | It’s up to $1.5 million Six months of business Funding within 24 hours |
Conclusion
The defective credit business loan rate is generally in the range of less than 25%, but you can get an SBA loan at a low rate of 10.50%. Credit scores are important, but a variety of factors can offset the risk. For example, a previous history of strong revenue, collateral, or hourly payments. Consider the interest rates, fees and repayment terms from various lenders to determine if you are receiving the ideal offer.
