Securing financing is a crucial milestone for many small businesses. However, if your credit score is less than perfect, getting approved for funding might seem like an uphill battle. Thankfully, small business loans are available for those with bad credit, which can help entrepreneurs access the capital they need, despite any financial hiccups in their past.
In this guide, we’ll break down the best loan options, how to improve your chances of approval, and what lenders look for beyond your credit score.
What Are Small Business Loans for Bad Credit?
Small business loans for bad credit are financing solutions tailored to business owners with a low personal or business credit score. Unlike traditional bank loans, which often require a high credit rating, these loans prioritize other factors, such as revenue, time in business, and collateral.
Lenders understand that a low score doesn’t necessarily mean your business isn’t viable. That’s why many alternative financing companies offer small business loans for bad credit, helping startups and growing businesses move forward despite past setbacks.
These loans come in various forms:
- Term loans
- Business lines of credit
- Merchant cash advances
- Invoice factoring
- Equipment financing
Each serves a different purpose, and your choice depends on your business model, revenue structure, and urgency of funding.
How to Get a Small Business Loan with Bad Credit
If you’re wondering how to get a small business loan with bad credit, you’re not alone. Thousands of entrepreneurs face this challenge each year. The good news? Preparation and strategy can significantly boost your approval odds.
1. Check Your Credit Report
Begin by pulling your personal and business credit reports. Understand what’s dragging down your score and dispute any inaccuracies. A few-point bump can widen your loan options.
2. Build a Strong Business Profile
Even if your credit is poor, a strong business history can offset it. Lenders often consider:
- Business age (at least 6–12 months is common)
- Monthly revenue
- Industry type
- Business plan and projections
3. Consider a Co-Signer or Collateral
Adding a co-signer with good credit or offering assets (e.g., equipment or inventory) as collateral can help you get a small business loan with bad credit on better terms.
4. Start with Alternative Lenders
Online and fintech lenders are more flexible than banks. They often provide quick and less bureaucratic small business loans for those with bad credit.
Top Bad Credit Small Business Loan Options in 2025
Here’s a curated list of some of the best small business loans for bad credit currently available:
1. Fundshop – Best Overall for Bad Credit Business Loans
Fundshop specializes in helping small business owners access capital quickly—even if their credit is less than perfect. With a streamlined application process, flexible requirements, and high approval rates, Fundshop is an excellent first choice for individuals seeking bad-credit small business loans. Their personalized service and fast turnaround make them a leader in the space.
- Loan Types: Merchant cash advance, working capital loans
- Credit Score: 500+
- Loan Amount: Up to $500,000
- Funding Speed: As fast as 24 hours
- Why Choose: High approval odds, friendly to new and growing businesses, tailored options
2. Fundbox – Best for Business Lines of Credit
Fundbox offers a revolving line of credit with fast approvals, even for borrowers with low credit scores. Businesses with just 6 months of activity and $100,000+ annual revenue are eligible.
- Loan Type: Line of Credit
- Credit Score: 600+
- Loan Amount: Up to $150,000
- Funding Speed: As fast as 24 hours
3. BlueVine – Best for Invoice Factoring
If your business issues invoices, BlueVine allows you to borrow against unpaid ones. This is ideal for managing cash flow without taking on traditional debt.
- Loan Type: Invoice Factoring
- Credit Score: 530+
- Loan Amount: Up to $250,000
- Funding Speed: 1–3 days
4. Lendio – Best Loan Marketplace
Lendio connects you to a range of lenders offering small business loans bad credit borrowers can qualify for. Their platform streamlines the application and pre-qualification process.
- Loan Types: Multiple (term, SBA, equipment)
- Credit Score: 500+
- Loan Amount: $5,000 to $2M
- Funding Speed: 1–7 days
5. Credibly – Best for Merchant Cash Advances
Credibly provides quick capital in exchange for a percentage of your daily sales. It’s ideal for businesses with substantial daily revenue but poor credit.
- Loan Type: Merchant Cash Advance
- Credit Score: 500+
- Loan Amount: Up to $400,000
- Funding Speed: Within 48 hours
6. National Funding – Best for Equipment Financing
Need new equipment to grow your business? National Funding offers equipment loans to borrowers with bad credit and a solid business history.
- Loan Type: Equipment Financing
- Credit Score: 575+
- Loan Amount: Up to $500,000
- Funding Speed: 24–72 hours
Pros and Cons of Small Business Loans with Bad Credit
Like any financial product, bad credit small business loans come with their benefits and trade-offs.
Pros:
- Faster approvals: Most lenders offer quick application reviews and disburse funds in days.
- Flexible eligibility: Revenue and time in business often matter more than credit scores.
- Build credit: Making timely repayments can improve both your business and personal credit.
Cons:
- Higher interest rates: Expect APRs ranging from 15% to 50% depending on your creditworthiness.
- Shorter repayment terms: Some loans require repayment in a few months.
- Collateral requirements: In some cases, assets may be needed to secure the loan.
Strategies to Strengthen Your Application
Even if you’re pursuing small business loans with bad credit, there are steps you can take to enhance your application.
Build Business Credit
Open trade lines with vendors, pay bills on time, and register with reputable credit bureaus, such as Dun & Bradstreet.
Improve Cash Flow
Lenders love businesses with healthy cash flow. Reduce unnecessary expenses and increase payment speed from customers.
Showcase a Clear Plan
Even lenders catering to low-credit borrowers want to see how you’ll use the funds. Have a detailed business or expansion plan ready.
Alternatives to Bad Credit Small Business Loans
If you’re unable to qualify or want to explore other options, consider:
- Business credit cards: Some cards cater to startups and don’t require a strong credit history.
- Grants: Research local government or nonprofit programs that offer small business grants.
- Crowdfunding: Platforms like Kickstarter can help you raise money without debt.
- Friends and family loans: If available, this can be an interest-free option.
Final Thoughts
A low credit score doesn’t mean your business dream is out of reach. Thanks to a growing number of online lenders and alternative financing options, you can still get a small business loan with bad credit and access the funds needed to launch, grow, or stabilize your business.
Whether you’re just starting or facing a temporary cash crunch, small business loans for bad credit offer a lifeline—and a stepping stone to better financial health.
