Running a business isn’t cheap, and there will be times when your revenue isn’t enough to cover expenses. That’s when business loans can help. But what if your credit score isn’t great? Maybe you missed payments during a tough financial period, or you racked up too much debt while trying to grow your business. Whatever the reason, having bad credit doesn’t mean you’re out of options. While banks may be quick to say no, plenty of other lenders are willing to give you a chance. The key is knowing where to look and which options make the most sense for your situation. Let’s look at the lenders that can help you secure the funding your business needs.
How to Secure a Business Loan With Bad Credit
Securing a business loan with bad credit might seem challenging, but it’s definitely possible. Some lenders focus on helping businesses like yours—you just need to know where to look.
1. Find the Right Lender
Traditional banks may turn you down, but many alternative lenders are open to working with businesses that have imperfect credit.
- Balboa Capital considers more than just your credit score. They offer loans up to $5 million with no collateral required.
- Rapid Finance looks at multiple factors beyond credit and even offers same-day funding, with loans ranging from $5,000 to $1 million.
- Noble Funding accepts credit scores as low as 525 and doesn’t require collateral for short-term loans.
- SBG Funding works with businesses that have at least six months of operations, a 500+ credit score, and $10,000 in monthly revenue.
2. Choose the Right Type of Loan
Not all loans work the same way, and some are easier to get with bad credit than others.
Short-Term Loans
These loans usually come with a repayment period of up to three years, with lenders prioritizing cash flow over credit history.
Hard-Money Loans
These loans use assets like real estate as collateral, which can boost your chances of approval even with bad credit.
Invoice Financing
If your business has outstanding invoices, you can sell them to a lender for fast cash while they collect payments from your customers.
Merchant Cash Advances (MCA)
MCAs offer quick cash upfront, with repayment taken as a percentage of future credit card sales. They’re easy to get but come with high costs.
Microloans
The Small Business Administration (SBA) and other groups provide microloans of up to $50,000 to support business growth.
Business Credit Cards
Even with bad credit, some business credit cards provide financing and a chance to improve your score over time.
Equipment Financing
If you need new equipment, this loan lets you use the equipment itself as collateral, making approval easier.
How to Increase Your Chances of Approval
Securing a business loan with bad credit isn’t just about choosing the right lender—it’s also about proving you’re a reliable borrower.
1. Keep Your Cash Flow Strong
- Lenders care about whether you can make payments. Keep your business bank account stable and your revenue consistent.
2. Get Your Financials in Order
- Have updated financial statements ready when applying. Lenders like to see a clear picture of your income and expenses.
3. Avoid Taking On Too Much Debt
- If you already owe a lot, lenders might hesitate to add more. Paying off some debt first can improve your chances.
4. Offer Collateral If Possible
- Putting up assets like property or equipment as collateral can make lenders more comfortable approving your loan.
5. Work With Lenders Who Look Beyond Credit Scores
- Certain lenders focus more on your business’s income and growth potential rather than your credit score. Look for one that matches your needs.
The Right Funding Can Change Everything
I’ve seen too many great businesses struggle just because of a bad credit score. That shouldn’t be the reason a business fails. Don’t let your past financial mistakes dictate your company’s finances. A loan should only be a stepping stone, not a setback. There are plenty of other options to get funding for your business.