The short answer
Yes, you can get a business loan with bad credit. With a personal FICO in the 500s to low 600s, conventional bank and SBA loans are usually out of reach, but equipment financing, invoice factoring, secured lines of credit, and revenue-based financing remain available. Expect higher rates — typically mid-teens to 40%+ APR — and lead with collateral or consistent revenue to qualify.
By Growth Fund Partners Advisory Team
Commercial financing & fractional CFO advisory specialists
How do lenders view bad credit on a business loan?
When your personal credit is weak, lenders shift their attention to two things they can still underwrite: collateral and cash flow. Asset-based products (equipment financing, factoring, secured lines) are repaid from something tangible, so your score matters less. Revenue-based products look at months of consistent deposits rather than a FICO number.
That is why the path to funding with bad credit is not about hiding your score — it is about choosing a product that is underwritten on strengths you actually have.
Which business loans work best with bad credit?
Accessible 2026 options ranked from lowest to highest cost.
| Product | Typical min. credit | Cost | Speed | Best for |
|---|---|---|---|---|
| Equipment financing | No hard minimum (asset-secured) | ~8% – 20% | 2 – 7 days | Buying machinery, vehicles, or gear |
| Invoice factoring | Weak credit OK | 1% – 5% per invoice | 1 – 3 days | B2B firms with unpaid invoices |
| Secured line of credit | ~600+ | Prime + margin | 3 – 10 days | Ongoing working capital |
| Revenue-based financing | ~550+ | High (factor-based) | 1 – 5 days | Steady card/ACH revenue |
| Merchant cash advance | ~500+ | 40% – 350%+ APR | 1 – 3 days | Last-resort short-term gaps |
Costs are illustrative 2026 ranges and vary by lender, revenue, and collateral. See our merchant cash advance true-cost guide before choosing an advance.
How do I qualify with a low score? A 4-step process
Know your numbers
Pull your personal and business credit, and gather 3-6 months of business bank statements. Lenders will ask for both.
Lead with collateral or cash flow
Identify assets (equipment, receivables, inventory) or consistent revenue you can pledge. These offset a low score.
Match to the right product
Skip products that lean on credit score and target asset- or revenue-based options that fit your situation.
Strengthen the file
Add a guarantor, reduce existing daily-debit debt, and clean up deposits before you apply to earn a better rate.
Who this is for
- Owners rebuilding after a past default or bankruptcy
- Newer businesses without an established credit history
- Firms with strong revenue but a weak personal FICO
- Companies with equipment or receivables to pledge
Frequently asked questions
Can I get a business loan with bad credit?
Yes. While most conventional bank and SBA loans want a personal FICO of 680+, plenty of financing exists for owners in the 500-to-600s. The key is switching from credit-based products to collateral- or revenue-based ones: equipment financing, secured lines of credit, invoice factoring, revenue-based advances, and asset-based lending all weigh your business's assets and cash flow more heavily than your personal score.
What credit score is considered bad for a business loan?
Lenders generally treat a personal FICO below 630 as subprime and below 580 as poor. Between 580 and 669 you are in 'fair' territory, where higher-cost financing is available but prime bank rates usually are not. Business credit scores (such as a FICO SBSS below 155) matter too, especially for SBA loans.
What are the best business loans for bad credit?
The most accessible options are equipment financing (the equipment itself is collateral), invoice factoring (advances against unpaid invoices), secured lines of credit, and revenue-based financing repaid as a percentage of sales. Each looks primarily at collateral or cash flow rather than your personal credit score.
What interest rates should I expect with bad credit?
Expect to pay more. Where a strong-credit borrower might see single-digit rates, bad-credit financing commonly runs from the mid-teens to 40%+ APR depending on the product and risk. Secured and equipment financing tend to be cheaper than unsecured or advance-style products because the lender has collateral to fall back on.
How can I improve my odds of approval?
Offer collateral, show consistent revenue with 3-6 months of bank statements, reduce existing short-term debt, add a creditworthy cosigner or guarantor, and keep your business bank account healthy. Even a modest improvement in your personal score or a few months of clean deposits can move you into a better pricing tier.
Should I use a merchant cash advance if I have bad credit?
Only with caution. MCAs are easy to qualify for but are among the most expensive options, with effective APRs that can exceed 100%. Before taking one, compare a secured line of credit or equipment financing. Our guide to what a merchant cash advance really costs breaks down the true price and the cheaper alternatives.
Sources & further reading
- Federal Reserve Banks — 2025 Small Business Credit Survey — approval rates and financing access by credit-risk tier, 2025
- U.S. Small Business Administration — Loan Programs — SBA credit and eligibility standards, 2026
Rates, costs, and figures cited above are drawn from the sources listed and were accurate as of the last-updated date. Actual terms vary by borrower, lender, and market conditions. This content is educational and is not financial advice.
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