Guides

Can You Get Business Funding With Bad Credit?

Often, yes. A low personal credit score makes bank and SBA loans hard to get, but several kinds of business funding weigh your business revenue more heavily than your credit. The trade-off is usually a higher cost.

Why credit matters less for some options

Banks lend mostly on credit history and collateral. Revenue-based funders and some online lenders look first at your business bank statements: how much comes in each month, how steady it is, and what you already owe. A business with strong, consistent deposits can qualify for some options even with a score in the 500s.

Options that weigh credit less

• Revenue-based funding. Based mainly on recent deposits. Fast, and among the more expensive options.
• Equipment financing. The equipment itself secures the deal, which can offset weaker credit.
• Invoice financing. If you invoice other businesses, your customers' ability to pay matters as much as your credit.

Options that weigh credit more heavily include bank loans, SBA loans and most lines of credit.

What funders look at instead

• Monthly deposits and whether they are steady.
• Time in business, often at least a year.
• Negative balance days and returned items in recent statements.
• Existing advances or loans and how much they take from your account each week.

How to improve your chances

1. Keep business revenue flowing through one business bank account.
2. Avoid overdrafts and returned payments in the months before you apply.
3. Be upfront about existing advances or loans; funders will see them in the statements.
4. Apply for an amount that fits your monthly revenue, not the largest number possible.

Watch out for promises made before anyone sees your file

No legitimate funder can promise approval before reviewing your bank statements. Be wary of anyone who does, or who asks for a fee before you have an offer in writing. Before you sign, check the total payback and the payment size.