Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 2, 2021

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Summary

  • Coronavirus lifted restrictions on bad credit loans and other personal loans due to mass financial hardship
  • Some lenders provide up to $10,000 for a COVID-19 hardship loan
  • Bad credit loans can have an APR of up to 36%

The COVID-19 pandemic created many financial hardships for people nationwide.

The government anticipated this problem and asked banks, finance companies, and other lenders to provide personal loans for individuals during the coronavirus crisis.

What if you have bad credit? How does the coronavirus affect bad credit loans? Don’t worry – we’re here to explain how coronavirus affected bad credit loans and what companies can get you a personal loan during these tough times.

Once you learn everything about how coronavirus affects a bad credit loan, start shopping for loans using our free online comparison tool above.

How does the coronavirus affect bad credit loans?

The COVID-19 pandemic caused millions to lose their jobs. Therefore, lenders agreed to give borrowers a deferment for up to three months. However, deferment periods vary for each company.

During the deferment period, you have an option to skip payments until the deferment period is over. However, you make smaller payments to your coronavirus hardship loan until your deferment is over.

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What if I miss a payment on a bad credit loan?

When you miss a payment on a bad credit loan, a late fee will be attached to the last monthly payment. If your bad credit loan is more than 30 days past due, it could affect your credit.

If you can’t afford to put a little extra on your monthly payment, always try to make the minimum payment.

Most bad credit loans are between $1,000 and $5,000 with an APR of up to 36%.

Mortgages approaching the end of forbearance are more restrictive. Missing a payment after a legal agreement with your lender will have adverse effects on your credit.

Does coronavirus affect the bad credit loan requirements?

The eligibility requirements for bad credit loans were more relaxed during the COVID-19 pandemic. Lenders knew that more people would look for loans as unemployment began to increase.

According to the Bureau of Labor Statistics, the unemployment rate increased to 14.8% in 2020 but decreased to 5.8% as of May 2021.

Although bad credit loans and COVID-19 hardship loans were easier to get, they often came with high-interest rates. However, several companies had zero APR as a special for signing up.

What loan companies provide bad credit loans during the coronavirus pandemic?

Coronavirus hardship loans for individuals are often classified as personal hardship loans, which vary for each company.

Speaking of companies, check out this list of lenders that provide COVID-19 hardship loans and other personal bad credit loans.

  • Best Egg
  • Capital Good Fund
  • Discover
  • HSBC
  • LendingClub
  • LightStream
  • OneMain
  • Oportun
  • OppLoans
  • PenFed
  • PNC
  • Possible Finance
  • Solarity Credit Union
  • Travis Credit Union
  • Upstart
  • Wells Fargo

Some companies provide loans as little as $300, while some lenders provide up to $10,000. Choose your hardship loan amount wisely. Bad credit tends to accompany higher than average interest rates.

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Can businesses qualify for COVID-19 hardship loans or bad credit loans?

The answer is yes. Business owners were receiving business loans through various programs. One of the programs is called the Paycheck Protection Program (PPP).

The Trump Administration passed the CARES Act on March 27, 2020, which provided opportunities for business owners to obtain PPP loans. The Biden Administration extended PPP loans to businesses until May 1, 2021.

PPP loans were known for providing help to businesses to pay employees as the business owner covered other expenses to keep their establishment afloat.

How Coronavirus Affects Bad Credit Loans: What’s the bottom line?

COVID-19 caused the state and federal government to act quickly, forcing businesses and services to shut down. This placed a lot of people at home. Those who couldn’t work from home lost their jobs.

Some people filed for unemployment. While they waited for approval, they may have applied to get COVID-19 hardship loans or bad credit loans.

Since coronavirus had a firm grip on our finances, some lenders provided zero APR for at least a year.

Now that you know how coronavirus affects bad credit loans, you’re ready to compare loan options near you. Enter your ZIP code in the free online quote tool below to compare multiple companies in your local area.

Frequently Asked Questions: How COVID-19 Affects Bad Credit Loans

Let’s answer a couple of frequently asked questions. Read on to get the details.

#1 – Can you improve your credit with a COVID-19 hardship loan?

As you make payments, even in deferment, you’re building credit. Paying your loan payments on time eventually builds up your credit.

#2 – Is there an alternative to bad credit loans?

You can get a no-credit-check loan instead of a bad credit loan. However, the interest rates (APR) for no-credit-check loans can be as high as 400%.