Securing a business loan can be challenging, especially if you have a poor credit score. But having bad credit doesn’t mean your entrepreneurial dreams are out of reach. In 2025, lenders have become more flexible and innovative, offering tailored financing solutions even for borrowers with less-than-perfect credit histories. This comprehensive guide will show you how to get a business loan with bad credit, the best lenders to consider, and strategies to improve your approval chances.
What Is Considered Bad Credit in 2025?
Your credit score is a critical factor when applying for a business loan. In 2025, most lenders follow the FICO credit scoring system:
- Excellent: 800–850
- Good: 740–799
- Fair: 670–739
- Poor: 580–669
- Bad: Below 580
If your credit score is under 580, traditional banks may see you as high risk. However, many online lenders, alternative financing providers, and fintech platforms offer business loans specifically designed for bad credit borrowers.
Can You Really Get a Business Loan with Bad Credit?
Yes, you can. While bad credit can limit your options and lead to higher interest rates, several types of financing do not rely heavily on credit scores. These lenders often consider other factors such as your business revenue, time in operation, cash flow, or collateral.
Types of Business Loans Available for Bad Credit
Here are the most common types of business loans available to borrowers with poor credit in 2025:
1. Short-Term Business Loans
These loans offer quick funding with repayment terms between 3 to 18 months. They are easier to qualify for and often used for working capital, inventory, or emergencies.
Pros:
- Fast approval
- Lower credit requirements
Cons:
- Higher interest rates
- Frequent repayments (often daily or weekly)
2. Business Lines of Credit
A business line of credit gives you access to a pool of funds you can draw from when needed. You only pay interest on the amount you use.
Pros:
- Flexibility
- Reusable funds
Cons:
- May have lower limits for bad credit borrowers
- Some require collateral
3. Merchant Cash Advances
A lump sum is provided upfront, repaid as a percentage of your daily credit card sales. This option suits businesses with high transaction volumes.
Pros:
- No credit check required
- Fast funding
Cons:
- High fees (factor rates)
- Daily deductions from cash flow
4. Invoice Financing
If your business deals with invoices, you can get an advance based on unpaid invoices. The lender collects the payment from your customers.
Pros:
- Based on accounts receivable, not credit
- Improves cash flow
Cons:
- Service fees
- Your customers may interact with the lender
5. Equipment Financing
Used to purchase or lease equipment, where the equipment itself serves as collateral.
Pros:
- Easier approval for bad credit
- Asset-backed
Cons:
- Only for equipment
- Risk of repossession
6. Microloans
Offered by nonprofit lenders, microloans are small loans typically under $50,000.
Pros:
- More lenient credit standards
- Supportive of startups
Cons:
- Small funding amounts
- Lengthy application process
Top Lenders Offering Business Loans for Bad Credit in 2025
Here are some of the best lenders to consider if you have bad credit:
1. Fundbox
- Minimum credit score: 600
- Loan amount: Up to $150,000
- Funding time: Next business day
- Best for: Business lines of credit
2. BlueVine
- Minimum credit score: 625
- Loan amount: Up to $250,000
- Funding time: Same day
- Best for: Working capital loans
3. Credibly
- Minimum credit score: 500
- Loan amount: Up to $400,000
- Funding time: 24 to 48 hours
- Best for: Short-term loans and merchant cash advances
4. Kiva
- Minimum credit score: No requirement
- Loan amount: Up to $15,000
- Funding time: Up to 30 days
- Best for: Microloans for startups and small businesses
5. National Funding
- Minimum credit score: 500
- Loan amount: Up to $500,000
- Funding time: 24 hours
- Best for: Equipment financing and working capital loans
6. Lendio
- Minimum credit score: 500
- Loan amount: $1,000 to $2 million
- Funding time: 1–3 days
- Best for: Loan marketplace comparisons
What Do Lenders Consider if Not Credit Score?
When credit score isn’t the deciding factor, lenders typically evaluate:
- Business Revenue: Monthly or annual income
- Cash Flow: Ability to cover debt
- Time in Business: Preferably 6 months or more
- Collateral: Assets to secure the loan
- Industry Type: Some industries are considered higher risk
How to Improve Your Chances of Getting Approved
Even with bad credit, you can take proactive steps to increase your loan approval odds:
1. Create a Solid Business Plan
A detailed business plan shows lenders your revenue goals, expenses, marketing strategy, and how you’ll repay the loan.
2. Provide Financial Documentation
Be ready with:
- Bank statements
- Tax returns
- Profit and loss statements
- Balance sheets
Lenders want transparency and evidence of your ability to repay.
3. Offer Collateral
Putting up assets such as equipment, vehicles, or property can reduce the lender’s risk and improve your terms.
4. Get a Cosigner
A cosigner with strong credit can help you qualify for better loan rates and increase approval chances.
5. Start Small
Start with a small loan, repay it responsibly, and build trust with your lender. This can help you qualify for larger funding in the future.
6. Work with a Business Loan Broker
Loan brokers can match you with lenders willing to work with your credit profile. They understand lender criteria and can help streamline the process.
How to Avoid Predatory Lenders
Desperate borrowers are prime targets for predatory lenders. Watch for:
- Sky-high interest rates or APRs above 60%
- Large upfront fees
- Lack of transparency in repayment terms
- No credit or background checks
Always read the loan agreement carefully, compare options, and check lender reviews.
How to Build Business Credit in 2025
Improving your business credit can open more financing opportunities. Here’s how:
- Incorporate your business as an LLC or corporation
- Get an Employer Identification Number (EIN)
- Open a business bank account
- Apply for business credit cards
- Work with vendors that report to credit bureaus
- Pay bills on time or early
- Monitor your business credit reports
Over time, this builds a separate credit profile from your personal one, making your business more creditworthy.
Pros and Cons of Getting a Business Loan with Bad Credit
Pros:
- Access to capital for growth or survival
- Multiple alternative loan options
- Chance to build business credit
Cons:
- Higher interest rates
- Stricter repayment terms
- Limited loan amounts
Frequently Asked Questions
Can I get a startup loan with bad credit?
Yes. Microloans, crowdfunding, grants, and loans from nonprofits are available for startups, even with poor credit. Some online lenders also offer startup business loans.
What is the easiest business loan to get with bad credit?
Merchant cash advances and invoice financing are among the easiest to qualify for, as they focus more on revenue and sales rather than credit score.
Will a business loan affect my personal credit?
Only if the lender requires a personal guarantee or if you default on the loan. Always ask the lender about how they report to credit bureaus.
How much can I borrow with bad credit?
Loan amounts typically range from $1,000 to $500,000 depending on the lender, your revenue, business type, and whether you provide collateral.
Are there government loans for bad credit?
While SBA loans generally require good credit, some SBA microloans and community development financial institutions (CDFIs) work with low-credit borrowers.
Final Thoughts
Getting a business loan with bad credit in 2025 is entirely possible if you know where to look and how to prepare. Alternative lenders and fintech platforms are making funding more accessible than ever. Focus on strengthening your financials, improving your credit over time, and choosing lenders that value your business’s potential—not just your credit score.
With persistence and the right strategy, you can get the funding you need to grow your business, even with a low credit score.