Getting a small business loan is easier now than it ever has been. Even if you own a brand-new startup and don’t have great credit, there are easy-approval business loans available to get you the capital you need.
Before we dig into the details about easy business loans, note that many of these options typically charge high-interest rates compared with traditional business financing. We’ll share a few loans that come with relatively good terms, as well as some that you can qualify for with bad or fair credit but may charge more.
Easy business loans with good rates
Whether you’re a new business owner or you’ve been around for a while, these easy business loans can get you the financing you need without the high underwriting standards of bank loans and lines of credit.
Also called supplier credit, vendor credit is one of the most basic forms of business financing available to all types of businesses.
If your business relies on vendors for supplies or inventory, you may be able to work out a financing deal that can improve your cash flow management. Instead of paying cash on delivery of the goods or services, you can arrange to pay within a set period.
For example, if you agree to pay your bill within 30 days, it’s known as net-30 payment terms. If it’s a 45-day agreement, you’ll have net-45 payment terms.
Taking advantage of supplier credit financing is an excellent way to gain access to working capital because it gives you time to turn the costs associated with purchasing inventory and supplies into sales to your own clients and customers.
Also, depending on the arrangement, you may be able to work out a deal to pay a low interest rate or no interest at all as long as you pay the invoice on time. In some cases, you may even qualify for a discount if you pay early.
To qualify for vendor credit, you simply need to have a conversation with your suppliers. Depending on the relationship, you may need to work together for a short while before a vendor agrees to credit terms.
Also, keep in mind that some vendors may opt to report your payments to the business credit reporting agencies, which can help you establish a business credit history. As you consider your current supplier relationships and future ones, consider these credit options as part of your decision-making process.
Business credit cards
Business credit cards offer business owners access to a revolving line of credit that you can use, pay off and re-use time and time again.
Because business credit card issuers base their underwriting on your personal credit score instead of your business, you don’t need any time in business to qualify. Also, while most of the best business credit cards are reserved for owners with good or excellent credit, there are options available even if you have bad credit.
Business credit cards can be a great asset to your business when used properly. You’ll typically get a grace period of a few weeks between your statement date and your due date, which means you get up to almost two full months from the start of the statement period to the due date to float your cash.
Another benefit of having a business credit card is the features that come with them. Many cards, for instance, offer a sign-up bonus and ongoing rewards on everyday purchases. While the percentage of value you get back is small, it’s better than not getting anything at all.
Also, some cards may come with other perks, such as an introductory 0% APR promotion, various insurance protections, travel benefits and more.
That said, business credit cards are best used if you have a plan to pay your bill on time and in full every month. There’s no set repayment term, so if you carry a balance, you could end up paying an interest rate close to 20% or more for a long time.
Finally, some business credit cards charge annual fees. But if you can get more value from the card’s rewards program and perks, it’s usually worth it.
You can typically qualify for equipment financing whether you’re a seasoned business owner or you’re just starting out. That’s because equipment loans require that you use the equipment or vehicle you’re financing as collateral for the debt.
If your business fails and you can’t repay the debt, or you just can’t manage it with your cash flow, the lender can repossess the equipment to satisfy the debt.
Because of this arrangement, equipment financing poses less of a risk to the lender than other easy business loans. And while your creditworthiness is an important factor in getting approved for equipment financing, the secured nature of the loan works in your favor.
As a result, you can typically expect relatively low interest rates. Based on our research, equipment loan interest rates average between 4% and 12.75%.
Note, however, that equipment financing may not be an easy-approval business loan for everyone. Lenders will still consider various factors to determine your creditworthiness, so it’s not a sure thing.
Easy business loans for bad credit
If you’re having a hard time getting approved for a business loan because you have bad credit, your financing options will be limited. However, you still have options. Here are some to consider as you try to find the right fit.
Invoice factoring is technically not a form of business financing, but it’s still worth talking about because it’s an easy way to get capital.
Invoice factoring involves selling an invoice in your accounts receivable to a third-party company, often called a factoring company. The company is then responsible for collecting the debt and, in exchange, you get a percentage of the invoice in the sale — typically between 70% and 90%, depending on the company and the transaction.
Because invoice factoring doesn’t involve a credit arrangement, the factoring company won’t run a credit check on you, or do any due diligence on your business at all, for that matter.
Instead, it will typically base its decision on the creditworthiness of your client who owes you money.
Keep in mind, though, that by selling an invoice to a factoring company, you’re giving them the right to contact your client directly to collect on the unpaid amount. If this happens, it could potentially have an impact on your relationship with the client.
A similar arrangement that could be considered an easy business loan is invoice financing. In this arrangement, you use your invoice as collateral to get an advance on the amount you’re owed. Then when the invoice is paid, you repay the debt plus interest and fees.
You can typically get more money through invoice financing, but it may be more difficult to qualify for if your credit is in bad shape.
Merchant cash advance
As the name suggests, a merchant cash advance is an advance on your sales as a merchant. More specifically, it’s an advance on your business’ credit and debit card sales.
This type of easy-approval business loan is a cash flow loan because instead of paying back the loan in equal installments, you pay it back from a percentage of your revenues from credit and debit card purchases.
Merchant cash advances don’t require great credit because they’re somewhat secured by your future revenues. However, you may have a hard time getting approved for one if your business is brand new and you don’t have a lot of sales.
Also, merchant cash advances are one of the most expensive forms of business financing, charging interest rates as high as 250% in some situations. As a result, it’s important to compare all of your options before settling on this one.
Online business loans
If you’re looking for a term loan or line of credit, you may be able to qualify for one with an online lender. Not only do some of these lenders offer easy-approval business loans but also fast business loans. Here are a few lenders to consider and what they have to offer.
Headway Capital offers business owners a short-term business line of credit, ranging from $5,000 to $100,000. Repayment terms include 12, 18 and 24 months, and you can choose to pay on a weekly or monthly basis.
As with a business credit card, you can use your line of credit, repay what you owe, then use it again. The lender charges a 2% draw fee every time you take money from the line of credit, and the annual percentage rate (APR) can range from 40% to 80%, based on your creditworthiness and the terms of the loan.
The lender doesn’t disclose a minimum credit score, but you’ll need to have at least a year in business and revenue of $50,000 or more to qualify.
The Business Backer
The Business Backer connects small business owners with funding advisors who can help you find the right financing option for your business — and you can qualify with a credit score as low as 550.
The lender offers term loans, lines of credit and cash advances. Here are the highlights of each:
- Term loan: You can borrow up to $200,000, which you’ll repay daily, weekly or semi-monthly over four to 18 months. The average monthly interest rate is 2.2%, which annualizes to 25.8% but doesn’t include the loan’s 3% origination fee.
- Line of credit: You can get a credit limit of up to $100,000, and pay it back weekly or monthly over 12, 18 or 24 months. The loan’s APR starts at 18%.
- Cash advance: You can get up to $200,000 in financing, which you’ll pay back daily, weekly or semi-monthly. There is no set repayment term. The lender charges a factor rate of 1.12 or higher. So if you borrow $10,000, you’ll pay at least $1,200 in interest.
Other eligibility requirements for The Business Backer include 12 months in business and at least $180,000 in annual revenue.
The bottom line
As a business owner, it’s possible to get access to easy-approval business loans regardless of where your credit stands. In general, though, many lenders have minimum requirements for annual revenue and time in business.
As you consider these and other business financing options, it’s important to take your time and shop around to find the best deals for you. While you may still end up paying more than you would with a bank loan or SBA loan, you can avoid paying more than you need to for your situation and need.
This article was originally written on August 15, 2019 and updated on December 7, 2021.