How to Get a Business Loan with Bad Credit

Learning how to get a business loan with bad credit starts with knowing your options. A business loan can help your company launch, grow, or stay afloat during a slow period. But credit is central to qualifying for a low-interest loan, and not every business owner has great credit.

Does that mean your business can't get a loan? Not necessarily. There are many ways to finance your business, even with bad credit.

You can even compare business loan options for borrowers with bad credit before you apply.

Below, we'll walk through small business loans for owners with poor credit, alternative financing options, and strategies to boost your approval odds.

Bad credit in business financing means your business or personal credit profile is weak enough to limit your loan options and raise your borrowing costs. Below, let's look at what bad credit actually is.

Your business has a credit profile, history, and score. It builds over time from whether you pay your debts on time and your debt ratio. That ratio — your Debt Service Coverage Ratio — compares your total debts to your total assets.

New businesses may have no credit history, making it challenging to secure a loan. Established businesses can struggle too. Missed payments or a high debt load can push a business's credit score below what most loans require.

This financial data is reported to credit bureaus like Dun & Bradstreet, Equifax, and Experian. To assess a loan applicant's risk, a lender examines one or more of these credit profiles. The lender may reject the application if the score is low or the report has derogatory marks.

Many lenders also review the owner's personal credit and may require a personal guarantee. Weak personal scores can limit options or raise costs, even if business revenues are steady. A low personal score may keep you from qualifying for business loan lenders with low interest rates.

Expect lenders to carefully assess both business and personal credit files when determining eligibility and pricing.

Fortunately, there are small business loans available for those with poor credit.

There's no single credit-score cutoff for a business loan, but the number still shapes your options and your rate. Traditional banks reserve their lowest rates for stronger personal credit. Some online lenders weigh revenue and cash flow more heavily than your score.

Personal credit is usually measured with a FICO Score. According to Experian's 2026 credit-score guidance, base FICO Scores run from 300 to 850 and fall into five tiers:

The lower your score, the higher the rate you should expect to pay. A weak score doesn't rule you out, though. The SBA, for example, sets no single credit minimum for its microloan program, and each nonprofit intermediary sets its own requirements.

Lenders weigh more than your credit score when they review a business loan application. With bad credit, strength in these other areas can help offset a weak score:

• Annual revenue. Steady or growing sales show a lender you can repay what you borrow.

• Time in business. A longer track record lowers a lender's perceived risk.

• Collateral. Assets that back the loan reduce a lender's exposure if you default.

• Cash flow. Healthy cash flow signals you can cover payments alongside other obligations.

• Business plan. A clear plan shows lenders how you'll use and repay the money.

Collateral often matters most when your score is weak, because it gives the lender a fallback if you can't repay. Many lenders will also ask the owner for a personal guarantee.

For companies with poor credit, several financing options are available. Each lender sets its own requirements, so you may not qualify for every option below.

What Are Short-Term Loans?

A short-term loan is repaid over several months rather than years, far faster than a traditional term loan. Interest costs may run higher, but qualification is often easier with weaker credit. Funding also tends to be faster, which helps when cash flow is tight. You can see how costs compare in our guide to business loan interest rates.

What Is a Business Line of Credit?

Unlike a small business loan, a line of credit doesn't hand you a lump sum all at once. Instead, you can borrow against a set credit limit as needed. Repay what you borrow, and those funds become available again.

What Are SBA Microloans?

SBA microloans provide up to $50,000 through nonprofit lenders, with repayment terms of up to seven years. Eligibility, interest rates, collateral, and guarantees vary by the individual lender's program and underwriting.

This can make microloans worth a look with bad credit. The SBA sets no single credit-score cutoff for the program. Each nonprofit intermediary decides its own credit and collateral requirements.

What Are Bad-Credit Business Loans?

Some lenders offer bad-credit business loans to businesses that don't qualify for other financing. They may weigh other factors, such as recent revenue or total debt. Expect interest rates on these loans to run higher than other options.

What Is Equipment Financing?

Need a vehicle, machine, or other equipment? With equipment financing, the equipment itself serves as collateral. That security means lenders may approve borrowers with weaker credit than an unsecured loan would require.

Can a Business Credit Card Help if You Have Bad Credit?

You may qualify for a business credit card even with poor credit, though you can expect a higher APR and a lower limit. Used carefully and paid on time, a card can also help you rebuild credit over time.

Yes — several financing options don't require good credit. Revenue-based products such as merchant cash advances, invoice factoring, and some online business loans often weigh your revenue more heavily than your credit score.

What Is a Merchant Cash Advance?

If your business accepts debit or credit cards, you may qualify for a merchant cash advance (MCA). An MCA typically purchases future receivables and is repaid through split card receipts or regular ACH debits. Funding can be fast, but the effective cost is often very high and can strain cash flow.

What Is Invoice Factoring?

This could help if you invoice clients and struggle with cash flow while waiting for payment. Invoice factoring involves selling your outstanding invoices to a third party for much of their value upfront.

The factoring company then collects payment from your customer. Once it does, you receive the remaining balance minus its fee. Because factoring isn't a loan, it won't show up on your credit report as debt.

What Are Other Alternative Financing Options?

Beyond the financing types above, a few other paths can get you the capital your business needs. These include:

• Using a credit card. A rewards card covers expenses and earns points you can redeem for cash back, travel, or other perks.

• Applying for peer-to-peer loans. Online platforms let groups of investors fund businesses that might not otherwise qualify.

• Asking for vendor terms. Many suppliers let you pay invoices later, which frees up cash flow.

• Borrowing from friends or family. Treat it like a business loan: agree on repayment terms in writing and honor them.

• Dipping into home equity or retirement savings. Treat this as a last resort, since it puts your personal finances at risk if you can't repay.

These alternatives can bridge a gap, but a business loan is often the better long-term fit. If it is, explore the full range in our guide to types of business loans.

You can get a business loan with bad credit by strengthening your file, comparing lenders, and applying strategically. Work through these steps:

1. Check your personal and business credit so you know where you stand.

2. Gather your financials and documents, including bank statements, tax returns, and your EIN.

3. Strengthen your profile by paying down debt, correcting report errors, and adding collateral or a co-signer.

4. Compare lenders and their credit, revenue, and time-in-business requirements.

5. Prequalify with a soft credit pull to preview offers without hurting your score.

6. Apply to the lender that fits best. Our guide on how to apply for a business loan walks through the paperwork.

You can improve your approval odds by strengthening your credit, tightening your business plan, and comparing lenders before you apply. Even if a lender doesn't require a high business credit score, plan months ahead so your business looks like an ideal candidate. Giving yourself time to improve your finances helps you qualify for more favorable terms and rates.

• Update your business plan. A clear plan shows lenders what you sell, who buys it, and how you'll repay.

• Shop around for a loan. Lenders set different requirements and terms, so comparing a few finds the right fit.

• Consider adding a co-signer. A co-signer can boost approval odds but becomes legally responsible, so agree on terms in writing.

• Review your finances like a lender would. Steady revenue or growth signals you can repay what you borrow.

• Prequalify with a soft credit pull. Many online lenders let you check estimated rates without denting your score.

• Offer collateral. Equipment, inventory, or receivables can offset a weak score. Comparing debt consolidation loans for bad credit first can simplify existing payments.

You can evaluate lenders and avoid scams by comparing costs, checking requirements, and watching for red flags. As you research, weigh a few things carefully.

First, know what different lenders offer and what you qualify for. Start by comparing interest rates and terms. Also look at extra fees a lender might charge, such as an origination or early repayment fee.

Next, understand each lender's credit requirements. Some publish the score they require, while others don't. If a lender doesn't use business credit scores, it may weigh the owner's personal score, so review your own credit first.

Work only with trustworthy providers. The bad-credit lending space attracts less-than-reputable companies.

Be cautious of scammers posing as lenders. Red flags include promises of guaranteed approval, pressure to act quickly, or requests for upfront fees, wires, crypto, or gift cards.

Legitimate lenders deduct costs after funding, not before. Verify the company's license, contact details, and complaint history, and read the loan terms carefully before signing.

Scammers are getting more sophisticated, and AI makes it easier to imitate legitimate companies. If a lender asks for any upfront fee, treat it as a warning sign. Check whether the company is licensed in your state, and look up how long its website domain has existed and where it's registered.

This guide is for you if:

• You're launching a brand-new business with little or no revenue history.

• You're an established owner whose personal credit has taken a hit.

• You've been denied a business loan and want to know your remaining options.

• You need funding quickly but want to steer clear of predatory offers.

Securing a business loan with bad credit is challenging but not impossible, and a denied loan application isn't a dead end.

Understanding your credit situation is the first step. Explore financing options — short-term loans, business lines of credit, and SBA microloans — that work for businesses with poor credit.

Strengthen your loan application by improving your credit score, updating your business plan, and considering a co-signer. Evaluate lenders carefully to find trustworthy ones with favorable terms.

By preparing thoroughly and choosing the right option, you may be able to obtain financing that fits your needs. Along the way, on-time payments help rebuild credit that unlocks better terms down the road.

Which business loans are easier to qualify for with bad credit?

Revenue-based options like merchant cash advances and invoice factoring, along with some online lenders, tend to have more flexible credit requirements. They typically cost more, so weigh the price against the speed.

Can you get a business loan with a 500 credit score?

Possibly. Some online and alternative lenders work with lower scores, but expect higher rates and shorter terms.

Can an LLC or startup with bad credit get a loan?

It's possible. Alternative lenders and SBA microloan intermediaries weigh revenue, collateral, and your business plan, though brand-new businesses face more scrutiny.

What credit score do you need for an SBA loan?

There's no single SBA-wide minimum, and the microloan program leaves credit requirements to each nonprofit intermediary lender. Individual lenders still set their own standards.

How can you improve your approval odds fast?

Correct errors on your credit reports, add collateral or a co-signer, and use soft-pull prequalification to compare offers without hurting your score.

To write this guide, our editorial team reviewed the U.S. Small Business Administration's microloan program materials and a national credit bureau's credit-score guidance. Where original data or first-hand expertise adds value, our editorial team supplements these sources.

• U.S. Small Business Administration — Microloan program details and eligibility.

• Credit bureau — FICO Score ranges and credit-tier definitions.