Best Business Loans Bad Credit in 2021 | Alternative Lenders for Small Businesses

June 1, 2021 | Editorial Team

If you have ever thought about starting a business, one of the main things that may have stopped you is a shortage of money. Businesses are expensive, especially when you’re first starting out. Many new business owners will try to get a loan to get their business started. If you have a bad credit score, however, getting a bad credit business loan from a traditional lender can be almost impossible.

Thankfully, there are alternative lenders for small businesses. Alternative lenders, such as the three we’re going to discuss, are more than willing to offer a business loan with bad credit. Loans Canada, Borrowell, and Loan Connect are three great options for a business loan with bad credit. Let’s look at the pros and cons of each lender/ lending platform. In addition, look no further if you need business insurance or the best business credit card.

Loans Canada

Loans Canada is not a lender itself; it is a lending platform. This is a type of search engine that helps Canadians with bad credit find the best lender for their business loans. They created their search engine to help Canadians with poor credit finance their businesses.

The lenders they partner with also offer personal and auto loans, as well as debt relief, even if you have bad credit. Some lenders even offer up to $300,000. This may sound too good to be true, so let’s take a look at the pros and cons of this search engine.


  • Small businesses can receive up to $300,000, depending on the lender.
  • Your business can choose your term up to a maximum of 60 months.
  • Even those with a poor credit score can get a decent interest rate. Interest rates range from 5.49% to 25%. The worse your credit score is, the higher your interest rate tends to be.
  • You don’t need to put up any collateral.
  • The website is easy to use and navigate. Your results will be easy to read, as all the information will be put into a chart to compare your borrowing options.
  • There is no brick and mortar location, so the whole process is completed easily online.
  • If you are approved, you will usually get your money within 48 hours.


  • You may be charged a higher interest rate if you have a bad credit score.
  • Although Loans Canada works with a wide range of lenders, your business is limited to only their partners.
  • If you repay your bad credit loan in full earlier than the term you agreed upon, you may have to pay a fee.


If you need a bad credit business loan, Loans Canada is more than happy to help. As they work with plenty of lenders, they can help you find the perfect bad credit loans, regardless of your credit score.

This search engine is also a good choice for a business looking for bigger loans. The maximum amount that Loans Canada offers is $300,000.

Instead of having to contact a variety of lenders yourself, Loans Canada will do the work for you. Don’t let your bad credit score get in the way of getting the perfect bad credit business loans. Another useful tool that can help you with this is a business loan calculator.


If you would prefer working with a lender directly, rather than using a middleman like Loans Canada, Borrowell is a good option. Borrowell is a Toronto-based online lender that has been around since 2014. They offer free personal credit checks, as they want to encourage Canadians with a low personal credit score to improve their borrowing options.

Since there is such a focus on your credit score, it may be tougher for those with bad credit to get approved for a loan. If your credit score is below 600, you may have to look elsewhere.

Borrowell also offers personal and car loans, mortgages and debt consolidation. It could be a one-stop-shop for all your financial needs if you have a fair to good credit score.


  • Borrowell will let you check your personal credit score every week without it lowering your credit score.
  • You can repay your loans earlier than your agreed-upon term without paying a fee.
  • Loans are typically given within 48 hours after you are approved.
  • You only need a yearly minimum income of $20,0000.
  • Although Borrowell is based in Toronto, they offer loans to Canadians everywhere.
  • No hidden fees. Borrowell values transparency.
  • Interest rates start as low as 5.6% and go up to 29.19%.
  • Borrowell has no brick and mortar locations. This means everything can be done easily and quickly online.
  • You could also get personal or car loans, debt consolidation or a mortgage with Borrowell.
  • You can see your credit score raise when you pay your loans on time.


  • Borrowell has stricter eligibility requirements than other bad credit business lenders. If you have bad credit or your income is too low, you likely will not get approved.
  • Borrowell charges a one-time fee called an origination fee. It is typically 1% to 5% of your loan.
  • Your business can only get a maximum of $35,000 from Borrowell.


If you don’t want to go through the effort of weeding through multiple lenders, working with Borrowell may be a good choice for you and your business. That being said, it may be hard for you to get approved for a loan with Borrowell if you have a bad credit score. Any credit rating below 600 will likely get rejected. Similarly, if you need a loan bigger than $35,000, Borrowell cannot help you.

Borrowell is a reputable lender with a decent interest rate. So, getting a loan from them, if you are eligible for it, can be beneficial. If you’re not eligible, you can look into a lending platform that specializes in bad credit business loans.

Loan Connect

Another business loan search engine is Loan Connect. Loan Connect is a Toronto-based company that has been helping Canadians everywhere, even those with bad credit, since 2016.

They partner with lenders that offer a variety of loans up to $50,000. There are loans for students, emergencies, home renovations, cars, debt, and businesses.

The application process is done online and will only take around five minutes. Once you input your loan type, personal information, and financial information, you’re more than halfway done! Loan Connect will display each lender you are eligible to work with, so you can apply directly with them.


  • Canadians with bad credit scores are still welcome. Your debt just can’t be more than 60% of your income.
  • In addition, you just need to be Canadian and of the age of majority in your area to qualify.
  • Interest rates can start as low as 4.6%
  • Loan Connect is a free service, and there is no pressure to work with any lender they suggest.
  • You get to choose your loan term to a maximum of 18 months.
  • Loan Connect has 12 different loan types, so there is something for everyone.
  • Canadians from any province or territory are eligible.


  • Your interest rate will be higher if you have a bad credit score.
  • Loan Connect will only suggest a lender they partner with.
  • If you need more than $50,000 for your bad credit business loan, Loan Connect cannot help you.


As Loan Connect is a free search engine, it is a great option for those looking to compare multiple lenders at once. The search engine is also readily available to Canadians from all over, even those with bad credit. So even if you were rejected by the bank, Loan Connect could still help you find the perfect business loans.

If you have a lot of debt, however, this search engine may not be able to help. Similarly, if you need a business loan of more than $50,000, you will need to look elsewhere.

Business Loan Fees Explained

If you have ever applied for a loan from either a bank or a lender, you have likely been charged a variety of fees. This tends to be how a bank and lender make most of their money. The biggest issue with these fees is how much they vary, depending on who you are getting money from. So, it is important that you know and understand what these fees are beforehand.

The main fee you will encounter with a bad credit business loan isthe interest rate. Lenders tend to charge those with bad credit a higher interest rate as they are taking a higher risk lending to you. The interest rate can be a fixed rate or a floating rate. Often, the lender will let the business owner choose.

Depending on the lender, you will also have to pay an origination fee, sometimes simply called a registration fee. It is charged when you first apply and is used to process your small business loan application.

If your payment is late or rejected, you may also be charged a fee. This is meant to encourage you to pay on time every month.

Some lenders also charge a fee to process your payment every month. This is typically called an administrative fee, and can range from $50 to $100. In addition, your business could be charged a transaction fee to process the payment every month. If there is a transaction fee, it will vary depending on the payment method. Wire transfers tend to be more expensive than direct deposit, for example.

Depending on your small business loan agreement, you may not be able to make an early repayment. If you do repay it early, there could be a fee. Another option is to take advantage of a business savings account to accumulate interest and pay the loan back earlier, rather than paying a fee each time you make an early repayment.

The Bottom Line

Many new business owners are hesitant to apply for a small business loan, especially if they have a poor personal credit history. One of the best ways to fix your credit score, though, is to take out loans and repay them on time. There are plenty of options to get a small business loan, regardless of your personal credit history. Don’t let your credit score hold you back from opening your business.

It is important as a business owner, you understand all of the lender’s conditions before agreeing to anything. Similarly, it is better to get multiple quotes beforehand, so you know your business is getting a good deal.

Loans Canada and Loans Connect are great places to search for bad credit small business loans. Borrowell is also a good lender for small businesses. Get out there and start your business today, bad credit or not!