Business Loans for Bad Credit: Where To Apply and Qualify

Getting a business loan with bad credit can be challenging, but it’s far from impossible. While your options may be more limited and your rates may be higher, many lenders look beyond your credit score and consider factors such as revenue, cash flow and time in business.

Here's where to look for funding and how to improve your chances of approval.

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Key Takeaways

• You can get business loans for bad credit, though rates run higher and options narrow. Many lenders weigh revenue, cash flow and time in business alongside your score. Approval still isn't guaranteed.

• Banks often want scores around 680, while some online lenders approve scores near 500. Credit unions may go as low as 580, and some Community Development Financial Institution (CDFIs) funds set no score minimum at all.

• CDFI and microlenders are built for bad-credit and underserved borrowers. They lean less on your score and may fund in 14 days to three months.

• Costs climb fast with weaker credit, so compare annual percentage rates (APRs) before you sign. Watch for fees above 5% of the loan value, a warning sign the Small Business Administration (SBA) flags for predatory lenders.

• Check your credit and fix errors before applying to avoid wasted inquiries. A single hard inquiry usually lowers your score fewer than five points, according to FICO.

Summary generated by AI, verified by MoneyLion editors

Business Loans for Bad Credit: The Basics

Not all lenders evaluate bad-credit borrowers the same way. Before applying, here are a few things to know:

• Some lenders focus heavily on credit score, while others consider revenue, cash flow and time in business.

• Borrowers with bad credit may be able to get startup funding through SBA loan programs.

• Online lenders may offer more flexible requirements, such as giving heavier weight to what’s in your bank statements instead of focusing on your credit score.

• If your business has unpaid invoices, invoice factoring may be an option. 

• If your business is newer or serves an underserved area, a microlender or CDFI may be worth checking out.

• Bad credit may still affect your approval, loan amount, repayment term or interest rate. Before applying, check whether the lender uses a soft credit check for prequalification or a hard credit check that could affect your score.

What Credit Score Do You Need for a Business Loan?

Lenders have different requirements when looking to approve loans for a business. In general, a credit score of 680 is what you’ll need for the best terms and rates, but some lenders may approve customers with a score in the low 500s.

Best Types of Business Loans for Bad Credit

The best type of business loan is the one that meets your credit profile and is affordable. Here’s how common business loan options compare. 

Where To Apply for a Business Loan With Bad Credit

Once you determine which type of lender will match your funding needs and credit score best, here’s where to apply. 

How To Apply for a Business Loan With Bad Credit: Step-by-Step

Applying for a business loan with bad credit isn’t that different from applying for a business loan with fair credit. Here’s how. 

Step 1: Look Over Your Credit

Checking your credit to make sure your information is accurate is very important. If you find any mistakes in your report, file a dispute before applying for the business loan.

Also, be aware of your credit score. For example, if one type of business loan requires a score of 680 and you know that your business score is 550, you can save yourself time and an unnecessary credit inquiry. 

Step 2: Check Your Eligibility

Loans have requirements outside of just your credit score. For example, a loan could require a minimum annual revenue amount, cash flow requirements, and even a minimum amount of time in business.

Again, much like knowing if your credit score qualifies, knowing if you qualify for the loan based on its requirements can save you time.

Step 3: Write a Clear Business Plan

Having a well-written business plan is essential when requesting a loan because it can improve your chances of approval. Make sure your business plan clearly states the following:

• The purpose of the loan

• A description of your products or services

• Your marketing strategy

• A full market analysis

Step 4: Shop Around

It could be tempting to apply for the first loan you see. Try to avoid the temptation and do your research first.

Review different lenders and loan options to see which works best for you. You might find a lender who can accommodate your needs and provide you with the best deal.

Step 5: Gather Documentation

Besides your business plan, you may need to provide:

• Tax returns

• Bank statements

• Financial statements — profit and loss statements, balance sheets and cash flow statements

• Personal financial statements

• Business licenses and formation documents

• Accounts receivable and payable details

• Financial projections

• Proof of collateral

How To Improve Your Approval Odds

Having a lower credit score means you should take advantage of every opportunity to improve your chances of approval. Here are some suggestions. 

If You Don’t Need the Loan Right Away

• Consider waiting before you apply for the loan.

• After checking your credit, you might notice areas where you could improve your chances of getting better loan terms by increasing your score.

• Wait to get those issues cleared up and build up your credit score before applying for the loan.

If You Want To Avoid a Loan You Can’t Afford

• Pay close attention to the repayment terms of your loan.

• The terms can differ based on your credit. There might be a higher APR, a longer or shorter loan term or additional costs, like an origination fee.

• A higher APR could mean higher payments, though those could be helped with an early payoff.

• Check with your lender to ensure that there’s no prepayment penalty. 

If You Don’t Qualify for a Loan

• A co-signer might be able to help you qualify for a loan, which may increase the likelihood that you will obtain better terms for your loan.

• Just be sure to select a trustworthy co-signer with good credit.

Can You Get a Personal Loan To Fund Your Business?

If you can’t qualify for a business loan, a personal loan might be an alternative option. However, check with your lender to see if it allows personal loan funds to be used for business purposes. 

Personal loans are based on your personal credit, income and debt. Business loans consider business revenue, cash flow and how long you’ve been in business. If you have bad credit, a personal loan might still be hard to get or come with a higher APR.

The biggest difference is responsibility. With a personal loan, the debt is in your name, even if the money goes toward your business. If the business can’t repay it, your personal credit and budget will likely suffer. 

Watch Out for Predatory Business Lenders

Bad credit can make some loan offers look tempting, especially if you need money fast. Before you sign, make sure you understand the full cost of the loan, the repayment schedule and any fees.

APR warning: Be careful if the APR is much higher than other offers or if the lender won’t clearly disclose the APR. The SBA also warns borrowers to watch for fees that are more than 5% of the loan value.

Other red flags to watch for, according to the SBA, include:

• Pressure to sign before you can compare offers

• A lender asking you to lie on paperwork

• Blank spaces on documents you’re asked to sign

Your Next Steps

Having bad credit can be challenging, but it doesn’t mean you have to delay building your business. You may just need to take a few extra steps before applying.

• Check your credit so you know where you stand before comparing lenders.

• Review your business revenue, cash flow and time in business to see which lenders may be a good fit.

• Compare options, such as microlenders, CDFIs, online lenders and secured business loans.

• Look closely at the APR, fees and repayment terms before signing.

• Wait to apply if you can improve your credit score or strengthen your application first.

FAQs

Can I get a business loan with bad credit?

It is possible to get a business loan with bad personal credit, but it does play a role in your approval process. Your score and history can affect your approval or even your interest rate.

Will applying for a business loan hurt my credit score?

Yes, but it will be temporary. Lenders may check your personal credit history to lend, especially if you don’t have any business credit. A hard inquiry can reduce your credit score fewer than five points, according to FICO.

Does a bad credit business loan help build my business credit?

Yes, as long as your business has a federal employer identification number, you make your loan payments on time and in full, and your lender reports your payment history to one or more of the three main business credit bureaus: Dun & Bradstreet, Equifax Small Business and Experian Business.  

How do you get business credit?

Make sure your business EIN is registered, apply for things like business credit cards, and use services that report to the credit bureaus. It is also important to monitor your business credit, much like your personal credit and stay on top of any errors.

Key Terms

• Bad credit: Generally a personal credit score in roughly the 500s to low 600s, which can limit your loan options and push up your rate.

• CDFI: A mission-driven, federally supported lender that finances small businesses in underserved areas, often with flexible credit requirements.

• Microlender: A nonprofit or community lender that makes small loans and weighs factors beyond your credit score, such as your business plan and cash flow.

• Co-signer: Someone who agrees to repay your loan if you can't. A co-signer with good credit can improve your approval odds and terms.

• Hard inquiry: A credit check triggered when you formally apply for credit, which usually lowers a FICO Score fewer than five points and is temporary.

• APR: The yearly cost of a loan including interest and certain fees, which makes it the best number for comparing offers.

• Invoice factoring: Selling your unpaid invoices to a company for upfront cash, an option when your business has receivables but weak credit.

Summary generated by AI, verified by MoneyLion editors

Sources

• Wall Street Journal. 2025. "Invoice Factoring: What It Is and How To Quality."

• U.S. Small Business Administration. "Loans."

• Lendio. 2025. "Minimum credit score requirements for a business loan."

• Crestmont Capital. 2026. "Minimum Credit Score for a Business Loan: The Complete 2026 Guide."

• myFICO. "What is a Credit Score?"

• SoFi. 2026. "Average Business Loan Interest Rates for 2026."

• Lendio. 2025. "SBA loan options with bad credit: key requirements."

• Crestmont Capital. 2026. "Community Development Financial Institutions (CDFIs): The Complete Guide for Small Business Owners."

LaKenya Hill contributed to the reporting for this article.

Information is accurate as of June 15, 2026.