Aug 12, 2019

How to Get a Business Loan With Bad Credit

If you feel like your bad credit is keeping your business from achieving its potential, you’re not alone. However, don’t let 1 or 2 rejected loan applications keep you down. It is possible to get a business loan with bad credit.

What Credit Score Do You Need to Get a Business Loan?

Credit score requirements for business loans vary by lender and type of loan. Traditional banks will typically require good or excellent credit to qualify for a business loan, meaning you should have a personal credit score of at least 670, although some banks will consider applicants with credit scores in the low 600s. 

If you’re applying for a long-term or SBA loan, banks may want to check your business credit score in addition to your personal credit score. In this case, you’ll want to have excellent business credit as well—a Dun & Bradstreet score of 80 or above should suffice.

Business Loans for Bad Credit

There’s still hope for business owners with bad credit. While big banks tend to offer the lowest interest rates, plenty of other affordable lenders out there have lower credit score requirements.

Lending Marketplaces

Lending marketplaces have opened up the door for a new range of business owners to access business loans. These marketplaces are home to a wide range of lenders and leverage technology to connect borrowers with a loan that suits their needs and credit profile.

Loans from these lending marketplaces have a much higher approval rate than those from traditional banks. They also tend to be much easier to apply for, and you’ll often receive funding very quickly.

Peer-to-peer loans

Peer-to-peer lending services are similar to lending marketplaces in that they match borrowers with a variety of potential lenders. However, those lenders are individual investors rather than larger financial institutions. These peer-to-peer networks offer more options than your local area and tend to be more forgiving of blemishes on your credit report.


Microloans are exactly what they sound like⁠–small loans. These loans are geared toward entrepreneurs and therefore easier to qualify for than traditional loans. For one, the small loan amount is easier to manage than a larger loan, so lenders can extend these loans to startups that haven’t managed to raise a lot of capital and revenue yet. 

Secondly, your loan will typically be fulfilled by several lenders pooling their money together, so each lender can spread their risk among many different small loans. This feature makes peer-to-peer lenders more willing to lend to people with bad credit. However, if you don’t have good credit, you will end up paying higher interest rates.

Secured Loans

Secured business loans are loans you guarantee by offering up an asset as collateral. If you fail to repay your loan, the lender can seize your asset, which could be your home, place of business, equipment, or other capital. This loan is riskier for you because you could end up losing your property. However, it minimizes risk for the lender, meaning they’re more willing to lend you money despite a bad credit score–and might even offer better rates than you’d get on an unsecured loan.

If you’re a business owner in need of a business loan, there are always options. Bad credit won’t necessarily bar you from borrowing money, but you should keep in mind that you’ll probably have to pay a higher interest rate. 

Applying is free and it won't impact your credit

About the author

Elizabeth Aldrich
Elizabeth Aldrich
Elizabeth is a freelance writer covering personal finance, business, and travel. Her writing has appeared in The Motley Fool, Business Insider, Yahoo! Finance, LendingTree, Student Loan Hero, FOX Business, and more.


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