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LLC Small Business Loans for Good and Bad Credit

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LLC Small Business Loans for Good and Bad Credit

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Similar to other businesses, a business established as an LLC can get a business loan. Before you get ahead of yourself though, you will need to make sure you qualify. Keep reading to learn more about LLC business loans for a new LLC or mature LLC.

Can you get a business loan with an LLC?

As an LLC you can get a business loan. Before setting out to find the right LLC business loan you should do some research (and that’s probably how you ended up here). Through research and education, determine how much you can feasibly borrow - not only in terms of what you can afford to repay, but what you qualify for. You should also determine what kind of loan is best. For example, is a secured loan or unsecured loan better or do you just need financing for inventory or equipment. Before applying, familiarize yourself with what lenders will look at. To do this, visit mySMBscore. While it’s relative that lenders may consider your personal credit, your business credit history will likely be evaluated. At mySMBscore you can learn more about your business credit score as well as find lenders that can offer competitive business loans for your LLC.

Can You Get a Business Loan With a New LLC?

It may be difficult to get a business loan with a new LLC since the company is not established. In fact, you may not have business credit history, among other key factors lenders look at to determine eligibility. Here are a few key items to consider since you have a new LLC:

  • Credit History and Score: Lenders may look at your personal credit score and history since a new LLC typically does not have business credit history. A strong personal credit score can improve your chances of getting a business loan.
  • Collateral: As a new business some lenders may require collateral for a business loan, especially if you don't have business assets.
  • Personal Guarantees: You might be asked to signa personal guarantee, which means you are personally responsible for repaying the loan if your LLC fails to do so.
  • Interest Rates and Terms: As a new LLC, you might face higher interest rates due to perceived higher risk. Make sure you review loan terms and that they are manageable for your business.

As a new LLC, lenders may have a hard time offering a loan due to the unknown. Make sure you review the loan terms before signing since the interest rates may be higher than applicants with established businesses.

What is an LLC business loan?

An LLC (Limited Liability Company) business loan is similar to other types of business loans, but is extended to an LLC. An LLC is a business structure that protects owners from business debt and liabilities. While some companies do not qualify to register as an LLC, it’s  a rather common business structure. 

Why do LLCs need business financing?

LLCs may need business financing for many different reasons. Your reasoning can be unique to your situation and experience, but should be considered before taking on debt. Common needs for LLCs to require business financing can include:

Regardless of your need, MySMBScore is available 24/7 to help you gather the information you need to be a qualified applicant for an LLC business loan, as well as explore offers. 

How do LLC business loans work?

As an established business owner, you may already have some idea how LLC business loans work. LLC business loans work similarly to other types of business loans you already are familiar with. Depending on the type of loan you get, funds can be disbursed differently. Let’s compare an LLC line of credit with an LLC business loan and how they work to help you better understand.

  • LLC Line of Credit: When pursuing a line of credit, you’ll need to qualify. You can compare a line of credit to a credit card only on a much larger scale. An LLC line of credit is generally secured by an asset. You can be approved up to a certain amount and can draw on available funds as needed. You will only need to repay what you draw with interest. For ongoing expenses and cash flow challenges, this can be a smart option.
  • LLC Business Loan: A term business loan can be secured or unsecured, which can impact the funding process and specifics. In general though, once approved, funds can be funded as a lump sum and repaid in installments with interest. For one-time investments, a term business loan can be a smart option. 

Consider your needs and find out what you qualify for to determine what type of LLC business loan is best.

How does an LLC qualify for a loan?

Lenders that offer loans will have requirements that need to be met. Although these requirements can vary, 3 basic requirements are as follows:

  • Minimum time in business
  • Minimum annual revenue
  • Minimum personal and business credit score

To better understand requirements and how your LLC can qualify, visit mySMB score. 

How much of a loan can I get with an LLC?

The loan amount an LLC can receive can greatly depend on a variety of factors. The lender, the creditworthiness of the LLC, the needed funding, and inclusion of collateral can impact how much of a loan you can receive with an LLC. 

With tools like mySMBscore, you can track your industry score based on your business's financial data and see the key lending metrics lenders can use to determine loan amount eligibility.

What credit score is needed to get an LLC business loan?

Similar to other business loans, having a higher credit score can increase an LLC's chances of being approved for a loan. High credit scores can also result in lower interest rates and better loan terms.

Become a more informed business owner with an LLC by reviewing your business credit score and key financial metrics from the lender’s perspective with mySMBscore.

Does an LLC loan affect credit score?

Borrowing can impact credit score. In the beginning it may cause a negative impact, but with on-time payments, you can see positive impacts. 

Does an LLC have a credit score?

LLC businesses do have credit scores. Since an LLC is a separate legal entity from its owners, it can establish its own credit history and credit score. Just like with personal or business credit scores, an LLC's credit score is based on its credit history and payment behavior. 

Can you get an LLC business loan with bad credit?

As you're reviewing your options and determining what options you qualify for, you might be curious if you can get an LLC business loan with not so great credit. So, it may be difficult to get an LLC business loan with bad credit. Having a low credit score can signify a higher risk for the lender, which may cause some hesitation. 

If you happened to have poor credit, fear not. It certainly isn’t impossible to get an LLC business loan with bad credit. There are still options available. 

As you initiate your search, you can utilize mySMBscore to view your business credit profile through the eyes of a lender. Plus, you can identify ways to improve the financial standing of an LLC to better qualify for a business loan. 

Tips to Compare LLC Business Loans

When comparing LLC business loans, it's important to consider a variety of factors to ensure that you’re choosing the best options for your business. 

Here are some hot tips to help you compare LLC business loans:

  • Consider the interest rate. You can compare interest rates from multiple lenders with mySMBscore to find the best option for your.  
  • Review what fees are associated with the loan. Fees that can be included are origination fees, application fees, prepayment penalties, and late fees. 
  • Weigh your options for the repayment terms of the loan options. You may find loans that require daily or weekly payments. While some allow monthly payments. Choose the option that works best for your cash flow.
  • Factor the loan amount. Make sure the loan amount is sufficient to cover your business’ needs.
  • Consider your collateral. Understand what collateral might be required and whether you’re comfortable with the risk involved. 
  • Understand the financial standing of the business. Take advantage of resources such as mySMBscore to understand how to position an LLC to better qualify for competitive terms.

Can an LLC get an SBA loan?

Yes, an LLC can get a SBA (Small Business Administration) loan. In fact, SBA loans are one of the most popular types of loans for LLCs and other small businesses.

To qualify for an SBA loan, your LLC must meet the SBA's eligibility requirements. 

  • Be located in the United States
  • Be a for-profit entity
  • Operate in an eligible industry as defined by the SBA
  • Have exhausted all other financing options, including personal assets and other loans

Note that, there are a variety of SBA loans with varying requirements. 

Can LLCs use personal loans? 

LLCs can use personal loans, but it’s not typically recommended. When an LLC needs financing, it can be better for the LLC to obtain business financing rather than relying on personal loans. Using personal loans for business expenses can create confusion and make keeping track of business expenses and profits difficult. Not to mention, it can also create legal and tax issues, if not properly done. Avoid the headache and keep personal and business financials separate, as they should be.

Types of LLC business loans

There are different types of LLC business loans that are available from various lenders. Some of the most common types of LLC business loans include:

The borrowing needs of an LLC can depend on specific and unique circumstances. Some types of business loans can meet these varied needs better than others. Be sure to shop around and ask questions to find the best type the LLC.

How much do long-term business loans cost?

As the name suggests, long-term business loans are designed to be repaid over an extended period of time. Some can be paid off between 5 to 20 years or more. With the longer repayment term, long-term loans typically have lower monthly payments compared to short-term loans, but this does not mean the cost is lower. Costs for the loan will vary so it’s important to compare offers and look at the total loan costs, not just the payments. 

What are the pros and cons of LLC business loans?

LLC business loans can be a good way for limited liability companies to obtain financing to support their growth and operations. Here are some pros and cons of LLC business loans:


  • Liability protection
  • Better interest rates
  • Flexibility
  • Tax benefits


  • Higher fees
  • Personal guarantee requirements
  • Minimum credit score requirements 
  • Taking on debt

How to get a business loan for an LLC

To get a business loan for an LLC, you'll typically need to follow these steps:

  1. Determine the amount of funding you need
  2. Select a loan type
  3. Gather documentation
  4. Check the business credit score
  5. Check offers
  6. Apply for the loan
  7. Wait for approval
  8. Receive funding
  9. Reapy the loan

Is it hard to get a business loan with an LLC?

Getting a business loan with a new LLC can be more challenging than getting a loan as an individual or a larger, more established business. LLCs have a limited financial history, higher perceived risk, and lower credit scores, which can greatly impact a lender’s decision to approve LLCs for business loans.

Despite these potential roadblocks, it’s still possible to get a business loan with an LLC. Some lenders specialize in providing loans to small businesses, including LLCs. MySMBscore is here to make the process easier. Our platform leverages AI technology to provide personalized recommendations about how to improve the financial position of your business in the eyes of a lender.

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