How to Get a Small Business Loan with Bad Credit

Securing funding for your business can be tough — and it gets even harder when your credit score is working against you.

But here’s the good news: bad credit doesn’t mean no credit.

There are several ways you can still get a small business loan, even if your credit isn’t where you want it to be.

This guide breaks it all down — simply, clearly, and practically.

📌 Table of Contents

• What Counts as Bad Credit?
• Types of Lenders That Accept Bad Credit
• Steps to Improve Approval Odds
• Alternatives to Traditional Loans
• Final Thoughts

What Counts as Bad Credit?

In the U.S., a FICO score below 580 is generally considered “bad credit.”

Lenders may see you as a high-risk borrower, which can affect your interest rates or loan approval entirely.

But many alternative lenders now evaluate more than just credit scores.

They may consider your cash flow, time in business, and revenue trends.

Types of Lenders That Accept Bad Credit

Several non-traditional lenders are willing to work with business owners with poor credit.

1. Online Lenders: These lenders often approve loans based on business performance rather than credit history.

Examples include:

• BlueVine
• Fundbox
• OnDeck

2. Community Development Financial Institutions (CDFIs): These are nonprofit lenders that prioritize access to capital for underserved communities.

3. Microloan Programs: SBA microloans or nonprofit lenders like Accion provide small loan amounts with flexible terms.

Steps to Improve Approval Odds

Even if your credit isn’t ideal, there are ways to improve your chances.

✅ Prepare a Solid Business Plan: A detailed and compelling business plan can make a big difference.

✅ Show Revenue & Cash Flow: Prove that your business brings in consistent income.

✅ Offer Collateral: Real estate, equipment, or inventory can help secure the loan.

✅ Get a Co-signer: A partner with better credit may help you get approved.

✅ Build Business Credit: Open trade lines with vendors or apply for a secured business credit card.

Alternatives to Traditional Loans

Don’t overlook other financing options just because you’ve been denied a traditional loan.

💡 Business Credit Cards: While rates can be high, they’re often easier to qualify for.

💡 Equipment Financing: Lenders use the equipment as collateral, reducing their risk.

💡 Merchant Cash Advances: You receive a lump sum in exchange for a portion of future sales.

💡 Invoice Financing: Use unpaid invoices to get quick cash without taking on new debt.

Final Thoughts

Bad credit isn’t the end of the road.

It just means you need to be strategic, persistent, and creative when seeking funding.

From online lenders to government-backed microloans and alternative financing tools, you have more options than ever before.

With smart planning and the right information, you can secure the funding your small business needs — no matter your credit score.

And if you're looking for more personalized guides and finance tips, check out this related blog post below.

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Important keywords: small business loan, bad credit, business financing, SBA microloan, online lenders