Subprime Business Loans

A line of credit is a revolving loan that provides ongoing access to funds up to a set limit. This flexibility allows you to borrow money as needed, repay it, and borrow again—without reapplying each time. For bad credit borrowers, lenders are willing to offer lines of credit because they are generally secured by revenue or collateral.

Although the interest rates may be higher, this option is ideal for covering short-term expenses, dealing with unexpected financial challenges, or managing fluctuating cash flow. It’s especially useful for businesses in industries where revenue varies by season or project, as you only pay interest on the amount you actually use, making it a more cost-effective option than a traditional loan.

Short-term loans provide a lump sum of money that is typically repaid within a year or 18 months. These loans are structured to help businesses meet immediate needs or capitalize on time-sensitive opportunities. Short-term business loans can be an attractive option for subprime borrowers because they offer fast access to funds without a long-term commitment. However, because they are repaid quickly, the monthly payments can be higher.

These business loans are often used to manage urgent expenses such as equipment repairs, inventory purchases, or even hiring new staff for a seasonal surge in demand. Though the interest rates may be higher, the quick turnaround helps keep the total interest paid lower over time. It's a solid option for businesses looking for fast capital with a clear repayment plan.

Invoice financing allows you to leverage your unpaid invoices by borrowing against them. This type of financing is beneficial for bad credit borrowers because it relies more on the creditworthiness of your customers than on your business’s credit score. Lenders provide you with a percentage of the value of outstanding invoices, typically 70-90%, and you receive the remaining balance (minus fees) when the customer pays.

Invoice financing is an excellent option if you’re dealing with slow-paying clients and need immediate cash flow to cover day-to-day expenses. It is commonly used by businesses that offer services or goods on credit, such as wholesalers, manufacturers, or service providers because it helps bridge the gap between delivering goods or services and receiving payment.

Equipment financing is specifically designed for purchasing or leasing equipment. The equipment itself acts as collateral for the loan, which is why online lenders are more willing to offer this option to businesses with subprime credit.

This loan type is ideal for companies that need to invest in new machinery, vehicles, or technology to keep operations running smoothly or expand their capabilities. For example, a construction company may need to upgrade heavy machinery, or a restaurant may need new kitchen equipment.

Since the equipment is collateral, the lender’s risk is reduced, meaning companies with lower business credit scores can still qualify. Additionally, the loan term often matches the useful life of the equipment, making it easier to manage payments while benefiting from increased productivity and revenue.

Asset-based loans allow you to use your business’s physical assets—such as inventory, real estate, or equipment—as collateral to secure financing. These loans are a great option for businesses with subprime credit because lenders focus on the value of the assets rather than the credit score.

Asset-based business loans can provide larger bad credit business loan amounts than other subprime options, making them ideal for businesses that need significant capital for growth, expansion, or other large-scale projects. For instance, a retail business could use its inventory as collateral to fund new locations or stock up for a busy season.

While the interest rates may be higher than traditional business loans, the collateral significantly reduces the lender’s risk, making it easier for businesses with lower credit to access the funds they need.

A merchant cash advance (MCA) provides an upfront sum of money in exchange for a percentage of future credit card sales. This option benefits businesses with subprime credit but have strong daily credit card transactions, such as retail stores, restaurants, or e-commerce businesses.

Merchant cash advances offer a quick way to access funds, often within days, and repayment is directly tied to your sales. Instead of making fixed monthly payments, a portion of your daily credit card transactions is automatically used to pay down the advance, which can be beneficial during slow periods when revenue dips.

However, merchant cash advances tend to have higher fees and interest rates due to the risk involved for the lender, but the ease and speed of funding make it an attractive option for businesses that need immediate cash flow to cover urgent expenses, restock inventory, or invest in marketing campaigns.