Bad Credit Business Loans

We assist small business owners with imperfect credit in partnering with alternative lenders to obtain financing.

Intro To Bad Credit Business Loans

A low credit score doesn’t always reflect financial irresponsibility. Many diligent small business owners encounter bad credit due to circumstances beyond their control. Often, they rely on personal finances to sustain their businesses during the early stages. Unfortunately, once your credit score is affected, it can take significant time to recover. To assist these business owners, we offer Bad Credit Business Loans.

These loans are specifically designed for business owners with bad credit, without imposing excessive fees or unfavorable repayment terms that could further harm your finances. Unlike traditional business loans, Bad Credit Business Loans are structured to allow small business owners to make manageable payments without straining their cash flow.

What Are Bad Credit Business Loans?

Bad Credit Business Loans are designed for small business owners with credit scores below 600. These financing solutions provide the essential funds needed to keep your business operational, pay off existing debts, or cover short-term expenses. Typically, these loans have terms of up to eighteen months and come with higher interest rates compared to options like Merchant Cash Advances or Unsecured Business Loans. However, the loan amounts and repayment structures are tailored to be manageable, enabling business owners to repay effectively and quickly qualify for future loans, while potentially improving both their business and personal credit scores.

Explore this guide to learn about financing options available for small business owners with poor personal credit scores and understand the key considerations when seeking loan approval. With this knowledge, you can make informed decisions about small business loans for bad credit.


$1K – $5M


Starting at 1-6% p/mo


3 months – 5 years


1-3 Business days

How Do Business Loans For Bad Credit Work?

These are the best bad credit business loans available:

Business Line of Credit
Equipment Financing
Merchant Cash Advance
Working Capital Loans
Revenue-Based Financing
Invoice/Receivables Factoring

At 800Funding, the only small business loans not listed here are Business Term Loans and Small Business Administration (SBA) Loans. This is because when term loans or SBA loans lose their benefits of high borrowing amounts, low-interest rates, and long terms, they essentially become short-term loans or resemble products like invoice financing (receiving upfront payment on unpaid invoices) and merchant cash advances. SBA and term loans are considered the best small business loans due to their lowest interest rates on the market and are typically available only to business owners with high personal credit scores.

In contrast, every loan option on our poor credit list can be repaid quickly and offers modest funding amounts. These options allow small business owners to choose from various alternative lenders and flexible repayment schedules, including weekly, bi-weekly, or monthly payments, rather than being locked into fixed monthly payments.

Some bad credit small business loans focus more on cash flow and sales volume than credit scores. For instance, the borrowing amount for a merchant cash advance is based entirely on monthly debit and credit card sales. With accounts receivable factoring and invoice financing, your personal credit score is largely irrelevant. Revenue-based business loans have similar credit score requirements as merchant cash advances but consider your total monthly sales, not just card transactions.

Business lines of credit are also available to those with poor credit scores, though the terms may not be as favorable as those from a local bank. Nonetheless, small business owners with poor or limited credit can still access revolving lines of credit if this suits their business needs best.

Additionally, business equipment financing offers a structure similar to term loans, using the desired equipment as collateral. This reduces the risk associated with poor credit histories and personal credit scores.

Bad Credit Business Loans – Research, Facts & Reports

Nearly 65% of medium and high-risk credit applicants received at least partial approval when applying to online lenders (Source: 2023 Small Business Credit Survey).

55% of business loan applicants at online lenders cited the speed of credit decisions as their primary motivating factor (Source: 2023 Small Business Credit Survey).

Most traditional lenders generally require a minimum personal credit score of 650 for approval. Additionally, lenders offering traditional business credit loans and lines of credit typically prefer a minimum personal credit score of 680 (Source: Experian).

What Are The Advantages of Business Loans With Bad Credit?

The primary advantage of small business loans for bad credit is their accessibility. Even with a poor credit score, you can still get approved if your business has a steady cash flow. Strong sales can also help offset the impact of a poor personal credit score on the loan’s cost and terms.

Bad credit borrowers can use the funds to pay off existing debts, a common cause of poor credit. Many traditional lenders, however, do not allow funds to be used for this purpose or approve borrowers with significant existing debt.

Another benefit is establishing a track record of timely payments. While not every bad credit small business loan will directly impact your personal credit score, demonstrating your ability to repay a loan on time can qualify you for larger funding with lower interest rates and more favorable terms in the future.

Think of this type of small business loan or line of credit as the first step toward securing all the financing you need to achieve your goals. Less-than-perfect credit doesn’t make your goals unattainable; it just means you may have to wait a bit longer to reach them.

What Are The Disadvantages of Business Loans With Bad Credit?

Bad credit business loans typically do not offer the most competitive rates or highest loan amounts, reflecting the increased risk associated with poor credit. Alternative lenders manage this risk by providing smaller borrowing limits, higher interest rates, and shorter repayment terms.

Another potential drawback is choosing the wrong small business loan product or repayment schedule. While these loans are designed with manageable terms, each business operates on unique cash flow cycles. What is feasible for one company may strain another’s finances. Opting for an unsuitable loan with high rates and inflexible repayment terms (such as daily, weekly, or bi-weekly schedules) could adversely affect cash flow. In some cases, the urgency to secure funding may lead to rushed decisions that have negative financial implications.


Business Loan Product Comparison


How To Apply For Bad Credit Business Loans

Approval times vary depending on the chosen product and your business’s financial health. Some products can be approved in less than 24 hours, while others may take up to a week. Here’s how to apply:

Step 1: Choose the Right Product

Bad credit business loans come in various forms. To choose the right loan, assess which borrowing terms pose the least risk to your cash flow. Does your business operate in a highly seasonal manner? Do you encounter occasional revenue fluctuations? Would a business line of credit or merchant cash advance help grow your business? Consider the intended use of the funds, as it directly influences the loan repayment timeline.

Step 2: Gather Your Documents

Depending on the available bad credit business loans, you may need the following documents and information:

Step 3: Complete the Application

Begin your application process by contacting us or completing our simple one-page online form. You’ll need to input the details mentioned in step 2, along with your desired loan amount.

Step 4: Speak to a Representative

Once you apply, a representative will reach out to discuss the repayment terms and interest rates for your available financing options. This ensures transparency, so you won’t encounter any surprises or hidden fees during repayment.

Step 5: Receive Approval

Typically, the application process for a bad credit business loan takes a few business days, varying based on the chosen product. Once approved and finalized, you can expect a lump sum of funds to be deposited into your checking account within 1-2 business days.

Your Business Loan Gets Set Up – Now What?

Bad credit business loans offer not just funding but also a chance to enhance both your personal and business credit scores.

No matter the type of business loan you secure, it’s crucial to make all required payments punctually and completely. For business lines of credit or other forms of revolving credit, maintaining a balance below the credit limit is essential.

By consistently meeting your financing obligations on time and in full, you can boost your business credit score, paving the way for better rates and terms when seeking future business financing.

What If I’m Declined For Bad Credit Business Loans?

After assessing your business’s financial health, a lender may determine that a traditional business loan could potentially strain your cash flow. In such scenarios, we may suggest alternative financing solutions, such as a business credit card or a personal loan. These options typically have more lenient qualification criteria than business loans. While a business credit card may not provide an immediate high credit limit, it can be instrumental in enhancing your credit scores. Regular use and timely payments on business credit cards contribute positively to your business credit history and elevate your creditworthiness.

Credit unions are another viable option to explore. While their assistance may vary, it’s worthwhile to investigate the loan opportunities they offer.

To optimize your credit score prior to applying for a loan, consider utilizing credit repair services. We can assist you in identifying factors that lower your credit score and devising effective strategies to address them. Enhancing your credit score before applying will broaden your range of business loan options and secure more favorable loan terms.

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