How to Get a Business Loan With Bad Credit

Yes, you can get a business loan with bad credit. Banks and SBA lenders may decline you, but revenue-based products like short-term loans, merchant cash advances, and invoice factoring routinely approve scores in the 500s. These lenders weigh your monthly deposits, time in business, and collateral more than your FICO.

A weak credit score narrows your menu and raises your cost, but it rarely closes the door entirely. The key is knowing which lenders look past credit, what they look at instead, and how to present your business so the numbers do the talking.

What counts as bad credit for a business loan?

Lenders generally treat a personal FICO below 670 as subprime, and below 580 as poor. But credit is just one input. A 560 score paired with $40,000 in steady monthly revenue is far more fundable than a 620 score on a brand-new business with thin deposits.

When your score is low, lenders reduce their risk in three ways: shorter terms, higher rates, and a personal guarantee or collateral. Understanding that tradeoff up front helps you avoid offers that look fast but cost far more than the capital is worth.

Which business loans can I get with bad credit?

Not every product has the same credit floor. Here is how the main options stack up for borrowers with damaged credit.

A few of these deserve a closer look:

• Invoice factoring leans almost entirely on the creditworthiness of the companies that owe you money, not your own score, which makes it one of the most accessible options for B2B businesses with unpaid invoices.
• Equipment financing is self-collateralizing: the machine, truck, or hardware secures the loan, so lenders accept weaker credit than they would on unsecured debt.
• A merchant cash advance is the easiest to qualify for but the most expensive. It advances cash against future sales and repays via a daily or weekly holdback. Use it only when the return on the capital clearly beats the cost.

What do lenders look at instead of credit?

When your score is low, these factors carry the weight:

How much does a bad-credit business loan cost?

Expect to pay more than a prime borrower. Where a strong-credit applicant might land a term loan in the high single digits, a bad-credit borrower often sees rates ranging from the high teens to well over 50% APR on the most aggressive short-term products.

Run your real numbers before committing. The calculator below lets you model a payment at the wider rate band that bad-credit borrowers typically face.

For a deeper comparison across scenarios, use the full payment calculator to test different amounts and terms side by side.

How can I improve my odds and get a better rate?

You do not have to take the first offer. A few moves can meaningfully improve both your approval odds and your pricing:

• Borrow only what the cash flow supports. Lenders reject deals where the payment swallows too much of your monthly revenue. Right-sizing the request helps.
• Clean up your bank statements first. Avoid overdrafts and negative days for 60–90 days before applying; recent NSF activity is a fast path to a decline.
• Offer collateral when you have it. Secured options like equipment financing or invoice factoring almost always beat unsecured short-term debt on cost.
• Match the product to the use. A short-term gap is a job for a business line of credit or working capital facility, not a long-term loan you will overpay on for years.
• Build business credit in parallel. On-time payments to vendors and lenders that report to the bureaus gradually shift the equation in your favor for future borrowing.

The bottom line

Bad credit changes the terms of the conversation, not whether the conversation happens. Lead with your revenue, keep your bank statements clean, offer collateral where you can, and match the product to the actual need. Done right, a bad-credit business loan can fund growth today and help rebuild the credit that earns you cheaper money tomorrow.