How To Get A Business Loan With Bad Credit?

Bad credit can feel like a roadblock, especially when you're trying to grow or sustain your business. But the truth is, you can still get a business loan even with bad credit. It might take more effort and creativity, but many lenders understand that your credit score doesn’t tell the whole story.

Whether you're a startup owner or a seasoned entrepreneur, this guide will show you how to get a business loan with bad credit in 2025, what your options are, and how to increase your chances of approval.

What Counts as “Bad Credit”?

In general, a personal credit score below 580 is considered poor, while scores between 580–669 fall into the fair range. Business credit scores (ranging from 0 to 100) work differently, but anything under 50 may be seen as risky by lenders.

However, many alternative lenders now use more flexible approval models that go beyond just your credit score.

Steps to Get a Business Loan With Bad Credit

1. Know Your Credit Score and Report

Before applying, check both your personal and business credit reports. You can access your personal credit score from free platforms like Credit Karma or directly through credit bureaus. For business credit, services like Dun & Bradstreet or Experian Business offer access.

Looking for errors and inaccuracies can unfairly lower your score, and correcting them could boost your chances.

2. Build a Strong Business Profile

If your credit is shaky, highlight other aspects of your business:

• Consistent cash flow
  

• Positive bank statements
  

• Strong monthly revenue
  

• A solid business plan
  

• Repeat customers and growth metrics
  

Lenders want to know you can repay the loan. Show them your business is financially stable even if your credit isn’t.

3. Explore Alternative Lenders

Traditional banks usually have strict credit requirements. But alternative and online lenders are more flexible and often approve bad credit borrowers.

Some lenders to consider:

• Online lenders like Fundbox, OnDeck, and Bluevine
  

• Merchant cash advance providers
  

• Invoice financing companies
  

• Microloan lenders like Accion or Kiva
  

• Peer-to-peer platforms
  

These lenders may base approval on business performance, not just credit.

4. Look Into Secured Business Loans

If you’re willing to put up collateral like equipment, vehicles, inventory, or real estate you may qualify for a secured loan, even with bad credit.

Secured loans are less risky for lenders, which can improve your approval odds and interest rate.

5. Consider a Co-Signer or Guarantor

If you have a business partner, investor, or family member with good credit, they can co-sign your loan. A co-signer agrees to repay the loan if you default, giving lenders added confidence.

This can be a good short-term solution while you rebuild your own credit.

6. Try an SBA Microloan

The U.S. Small Business Administration (SBA) offers microloans of up to $50,000 through nonprofit lenders. These lenders often work with entrepreneurs who have less-than-perfect credit and offer more lenient terms.

Some SBA-affiliated community lenders may also offer credit-building programs alongside the loan.

7. Start Small

If you're struggling to get approved for a large loan, consider:

• Business credit cards
  

• Small short-term loans
  

• Lines of credit
  

• Equipment leases
  

These can build your repayment history and gradually improve your credit profile.

8. Be Transparent and Show Your Plan

Be upfront with lenders about your credit challenges but back it up with a clear business plan showing how the funds will be used and how you’ll repay the loan.

Confidence, clarity, and a data-backed proposal can go a long way toward winning lender trust.

 Pros and Cons of Bad Credit Business Loans

 Pros:

• Easier approval from alternative lenders
  

• Access to capital even with credit challenges
  

• Can help build or rebuild your credit
  

• Quick funding (often within 1–3 days)
  

 Cons:

• Higher interest rates
  

• Shorter repayment terms
  

• Potential for larger fees or prepayment penalties
  

• Personal guarantees or collateral often required

 How to Improve Your Approval Odds Over Time

Even if you're approved now, you’ll get better loan terms as your credit improves. Here’s how to get started:

• Pay all bills and debts on time
  

• Keep credit utilization low
  

• Avoid taking on unnecessary debt
  

• Monitor your credit reports regularly
  

• Build a strong cash reserve
  

Small steps can lead to better funding opportunities in the future.

Final Thoughts

Get a business loan with bad credit in 2025 isn’t impossible, it just requires strategy and preparation. From exploring alternative lenders and microloans to offering collateral and being transparent about your finances, you have more options than ever before.

While your credit score matters, it’s not the only thing that defines your business’s potential. With the right approach, funding is still within reach and can even be a tool to help you rebuild your financial foundation.