Key takeaways

  • No-credit-check small business loans aren’t widely available
  • Knowing your personal and business credit scores can help you determine which financing products your business might be able to get
  • Different types of business loans can help businesses with bad credit — invoice factoring and merchant cash advances are generally easiest to get
  • When looking at business loans with bad credit, carefully review added costs like high interest rates and additional fees

Bad credit business loans help business owners with no credit or poor credit get the funding they need. They have relaxed eligibility requirements but tend to come at a higher cost. To get the right loan for your business, you’ll have to shop around to find the most affordable option.

Some lenders may even be willing to offer no-credit-check business loans, which can be helpful for business owners with bad credit. But before you jump straight to business loans with no credit check — which will seriously limit your options — you can explore financing with less-strict eligibility requirements. That means looking into alternative lending institutions like online lenders and alternative funding sources like credit cards or merchant cash advances.

If you’re a small business owner with bad credit, the following steps can help you choose the best bad credit business loan lender.

Check your credit score and eligibility

Lenders look at your personal and business credit reports and scores to help assess creditworthiness. They want to see how reliably you repay your debts on time and how much debt you currently owe. The higher your credit scores, the less risky you’ll look to lenders.

Before you look for a loan, you’ll want to check your credit score and report. For personal credit, a FICO score of 300 to 579 is considered a bad credit score. Business credit scores can vary, but some like Experian or Dun & Bradstreet PAYDEX consider scores from 0 to 49 as high risk.

Your personal and business credit scores are separate. Even if your personal credit is in the good or excellent range, you may still struggle to get a business loan if your business credit score is on the low end.

In addition to your credit score, here are the most common factors a lender looks at to see if you qualify for a loan:

  • Length of time in business. If you’re a brand-new company, this factor may work against your efforts to get a lot of funding. Most lenders want to see that your business has been established for at least two years, although some online lenders allow for establishment as recent as six months ago. In certain cases, you can often make up for your lack of longevity by keeping a positive payment history. Some lenders will also accept collateral to secure a loan, like commercial real estate or business equipment. You can also specifically seek up a startup business loan, which several online lenders offer.
  • Annual revenue. A lender will also consider your business’s annual revenue when determining how much to lend you. Most lenders want to see at least $150,000 (in deposits made to a business checking account), but some lenders can be more lenient.
  • Cash flow. Maintaining positive cash flow (more inflow than outflow) may also increase your credit score and make your company more appealing to potential lenders.
  • Current debt load. Credit utilization affects business credit scores just like it does personal credit scores. Aim to utilize no more than 30 percent of any credit line to improve your creditworthiness.

Can I get a business loan with no credit check?

No-credit-check business loans are rare. Your credit history is one of the most important factors lenders look at when you apply for a loan.

While it’s tough to find no-credit-check business loans, it’s possible to find small business loans that don’t focus as heavily on your credit score or past credit mistakes. These options include:

For other business funding — no credit check required — you can look into high-risk types of financing, which is more expensive but more accessible to borrowers with bad credit. Specifically, merchant cash advances and invoice factoring often don’t require credit checks.

Compare types of bad credit business loans

If you have bad business credit, you may want to explore other types of bad credit business loans besides traditional business loans. Expanding your funding options could translate to a better chance of approval and more favorable terms. You can even get some business funding with no credit check required, although it usually comes at a cost.

Here’s a look at the types of loans you may be eligible for with bad credit.

Term loans A lender will give your business money in one lump sum, to be repaid over a set period of months. These are generally harder to get if you have poor credit.
SBA loans Loans backed by the Small Business Adminsitration (SBA) come with less lending risk, so they can help some business owners get financing. If you can’t qualify for more common SBA loan types like 7(a) and 504 loans, look into SBA microloans and Community Advantage loans — these both have more relaxed eligibility requirements.
Lines of credit This is a revolving extension of credit, similar to a credit card. You can borrow against it as needed up to a set maximum amount.
Equipment loans An equipment loan helps you get the money to buy new business assets. The loan uses the equipment you purchase as collateral against the debt, which can make it possible to get approved even when you’re turned down for an unsecured loan or line of credit.
Invoice financing When a bad credit score prevents your business from getting a loan or line of credit, you may be able to leverage your unpaid invoices. In this type of transaction, you sell your unpaid invoices to a lender who pays you the value of the invoices immediately (minus their cut). You pay back the lender as clients pay their invoices.
Invoice factoring An invoice factoring company buys your invoices and gives you a lump sum payment. Then your clients pay the factoring company directly instead of submitting their payment to your business.
Business credit cards A business credit card typically requires good-to-excellent credit. One exception is the Capital One Spark 1% Classic, which is open to borrowers with fair credit. Personal credit cards might also be an option, but the loan amounts will likely be low.
Merchant cash advance This is based on your credit and debit card sales. The lender will look at your recent sales to determine how much you can afford to borrow. This type of loan may be a good solution for short-term lending needs but typically carries higher rates and shorter repayment terms than any other option.

Shop around and compare costs

If you have bad business credit, you can expect to pay higher-than-average interest rates for bad credit business loans. But interest rates aren’t the only fees you’ll have to watch out for.

Even the best bad credit business loans will come with additional fees. Here are a few to watch out for.

  • APR. The annual percentage rate (APR) on your loan or other credit represents the total yearly cost, including the interest rate and additional fees.
  • Origination fee. Many loans have a one-time origination fee. This is taken out at the start of the loan, so it lowers your actual distribution amount.
  • Underwriting fee. Lenders charge this to cover their operating costs and to cover their risks.
  • Closing fee. Your lender may also charge separate closing costs for certain loans.
  • Late payment charges. Lenders almost always charge for late payments. As a business with bad credit, paying late will drop your score on top of costing you an extra fee.

Gather required documents and information

Even with no credit check, small business loans require you to prove your business’s financial standing. As a result, when you’re ready to get a bad credit business loan, you’ll have to gather some documents and information. Having the following ahead of time can help you secure your loan as quickly as possible.

    • Business plan
    • Tax returns
    • Bank statements
    • Profit and loss statement
    • Cash flow statement
    • Balance sheet
    • Business registration
    • Business license and permit, if applicable

Apply for your business loan

As long as your documents are in order, applying may be the easiest part of the process. Some lenders give an immediate online response. In other cases, you may need to visit an in-person representative. Small Business Administration (SBA) loans tend to take longer for approval because you have to prove you have exhausted all other lending options.

If you receive multiple offers, add a review stage to your process. You will want to evaluate not just the amount of each business loan but also factors that affect the overall cost of the loan:

  • Term length
  • Monthly payments
  • Interest rate
  • Total cost with all fees
  • Penalties

Pros and cons of bad credit business loan lenders

Lenders who offer loans and lines of credit to businesses with bad credit may seem like a port in the storm, but they are not without their drawbacks.

Here’s a look at the pros and cons of working with a bad credit business loan lender.


  • Get money for much-needed business assets.
  • Build better credit by paying on time if the lender reports your payments to the credit bureau.
  • Improve cash flow by consolidating other debt.


  • Pay higher interest rates than customers with good credit.
  • Get approved for smaller amounts.
  • Receive fewer loan options and less flexibility on terms.
  • Not all lenders report your payments to the credit bureaus, so you may not build credit as you make on-time payments.

Bottom line

Your bad credit doesn’t have to keep you from getting the financing your business needs. You can fund much-needed projects and build your credit, but you won’t get the best-advertised interest rates or flexible terms. It’s often wise to use these loans as a short- to mid-term option and refinance when you have better credit.

Frequently asked questions

  • Some lenders will provide loans to businesses with a personal credit score in the 500s, but it may not be easy to find these lenders, and it will cost you more in interest and fees compared to businesses with good credit. Check out our guide to the best bad credit business loans for help and a list of lenders who offer loans to businesses with poor credit scores.
  • If your business has bad credit, you may need to seek out alternative business lenders. Many online alternative lenders offer more affordable terms and more approvals than traditional banks. For instance, you can often get a personal loan with a FICO score of just 500 from an alternative lender, when a traditional bank requires a score in the 600s. Ultimately, the best business loan is generally the one with the lowest interest rate and fewest fees.
  • SBA loans can be stricter than other bank loans. But they do specialize in loans for small businesses who have exhausted all other options. Some lenders like Lendio or Creditfy offer SBA 7(a) loans with lower eligibility requirements than many lenders. And many SBA microlenders offer microloans with low credit score requirements.
  • Make sure you’ve applied for the right type of business loan. Some types don’t have easier lending requirements like a shorter time in business and smaller annual revenues. You may have better luck with invoice factoring or a business credit card if you aren’t approved for another type of business loan. If all else fails, you can work on building your personal and business credit scores.