How to Get a Small Business Loan with Bad Credit in 2025 – Best Lenders & Tips
Introduction: Can You Get a Small Business Loan with Bad Credit?
Having bad credit doesn’t mean you can’t secure a small business loan it just means you need to be strategic. Traditional banks may turn you away, but alternative lenders, government-backed loans, and creative financing options can still provide the capital you need to start or grow your business.
This guide will cover:
✔️ The best small business loan options for bad credit
✔️ How to qualify and apply for funding
✔️ Lenders that accept lower credit scores
✔️ Tips to improve your approval chances
Let’s explore how you can secure business financing—even with bad credit!
Best Small Business Loan Options for Bad Credit
1. SBA Microloans
✅ Best for: Startups, minority-owned businesses, and women entrepreneurs
💰 Loan Amount: Up to $50,000
📉 Credit Score Needed: 550+
✔️ Key Features:
Funded by the Small Business Administration (SBA)
Lower interest rates than traditional loans
Flexible eligibility requirements
How to Apply:
Find SBA-approved lenders at SBA.gov.
2. Online Business Loans
✅ Best for: Quick funding with low credit requirements
💰 Loan Amount: Up to $500,000
📉 Credit Score Needed: 500+
✔️ Key Features:
Fast approval (24–48 hours)
Higher approval rates than banks
Offered by lenders like BlueVine, Fundbox, and OnDeck
How to Apply:
Visit online lenders’ websites and submit an application with business financials.
3. Business Line of Credit
✅ Best for: Businesses needing ongoing access to capital
💰 Loan Amount: Up to $250,000
📉 Credit Score Needed: 580+
✔️ Key Features:
Revolving credit line (use funds as needed)
Lower credit score requirements than term loans
Can be used for cash flow, inventory, and emergencies
How to Apply:
Check with online lenders like Kabbage, Fundera, and Lendio.
4. Merchant Cash Advances (MCAs)
✅ Best for: Businesses with strong sales but poor credit
💰 Loan Amount: Up to $500,000
📉 Credit Score Needed: 500+
✔️ Key Features:
No strict credit check—approval based on revenue
Funds are repaid as a percentage of daily sales
Higher fees, but fast funding (same-day approval)
How to Apply:
Check MCA providers like Rapid Finance and PayPal Working Capital.
5. Equipment Financing
✅ Best for: Businesses needing new equipment or machinery
💰 Loan Amount: Up to 100% of equipment cost
📉 Credit Score Needed: 550+
✔️ Key Features:
The equipment serves as collateral (lower risk for lenders)
Lower credit score requirements than other loans
Fixed monthly payments
How to Apply:
Lenders like Balboa Capital and National Funding specialize in equipment loans.
6. Invoice Financing
✅ Best for: Businesses waiting on unpaid invoices
💰 Loan Amount: Up to 90% of invoice value
📉 Credit Score Needed: 500+
✔️ Key Features:
No collateral needed
Approval based on customer invoices, not credit score
Fast funding (as soon as 24 hours)
How to Apply:
Companies like BlueVine and Fundbox offer invoice financing.
How to Qualify for a Small Business Loan with Bad Credit
Even with low credit scores, you can increase your chances of approval by strengthening other aspects of your application.
📌 Key Factors Lenders Consider:
✅ Business Revenue: Higher revenue can offset bad credit.
✅ Time in Business: Lenders prefer businesses operating for at least 6 months to 2 years.
✅ Collateral: Offering assets as security can improve approval chances.
✅ Business Plan: A strong business plan shows how you’ll use the funds and repay the loan.
How to Apply for a Small Business Loan with Bad Credit
Step 1: Check Your Credit Score
Get a free credit report from Experian, Equifax, or TransUnion.
If your score is below 600, focus on lenders that accept low-credit borrowers.
Step 2: Prepare Your Business Documents
Most lenders require:
✔️ Bank statements (last 6–12 months)
✔️ Business tax returns (last 1–2 years)
✔️ Profit and loss statements
✔️ Business plan (especially for SBA loans)
Step 3: Choose the Right Loan Type
Need fast cash? → Merchant Cash Advance or Online Loan
Need large funding? → SBA Loan or Equipment Financing
Have unpaid invoices? → Invoice Financing
Step 4: Compare Lenders
Use comparison platforms like Lendio, Fundera, or NerdWallet to find the best loan offers.
Step 5: Apply Online or Through a Local Lender
Online applications take minutes and funding can arrive within 24–72 hours.
SBA loans and bank loans take weeks but offer better terms.
Step 6: Improve Your Approval Odds
Apply with a co-signer or business partner with good credit.
Offer collateral to secure better terms.
Show strong cash flow and revenue history.
Frequently Asked Questions (FAQs)
1. What’s the easiest business loan to get with bad credit?
💡 Merchant Cash Advances and Online Loans are the easiest, as they rely on business revenue instead of credit scores.
2. Can I get a business loan with a 500 credit score?
💡 Yes! MCA lenders, invoice financing, and equipment financing often approve businesses with scores as low as 500.
3. Will applying for a loan hurt my credit?
💡 Some lenders use soft credit checks, which don’t impact your score. Traditional lenders may perform hard inquiries, which can lower your score temporarily.
4. What’s the fastest way to get a small business loan?
💡 Online lenders and MCAs offer same-day or next-day funding, while SBA loans take weeks to months.
5. How can I improve my chances of loan approval?
💡 Improve business revenue, use a co-signer, or apply for loans with collateral.
Final Thoughts: Secure Business Funding Despite Bad Credit
Getting a small business loan with bad credit is challenging but not impossible. By choosing the right lender, preparing a strong application, and considering alternative financing options, you can secure the funding your business needs.
📢 Take Action Now!
✅ Compare lenders on Lendio or Fundera
✅ Improve your business credit score
✅ Apply for the best loan option for your situation
Need help finding the right loan? Drop a comment below or visit SBA.gov! 🚀
