Can You Get a Business Loan with Bad Credit?
The short answer is yes — but the path looks different than a traditional bank loan. A credit score below 600 will close the door at most big banks, but it opens a different set of doors: alternative lenders, revenue-based financing, and asset-backed products that prioritize your business performance over your personal credit history.
At UrFunded, we work with over 3,000 lending partners — many of whom specialize in funding businesses that banks have turned away. Here's what you need to know.
Why Banks Say No (And Why That's Not the End)
Traditional banks use your personal FICO score as a primary underwriting factor because it's a fast, standardized risk signal. A score below 650 typically triggers an automatic decline regardless of how strong your business actually is.
Alternative lenders operate differently. They look at a broader picture:
- Monthly revenue — consistent cash flow is often more important than credit score
- Time in business — 12+ months of operating history significantly improves approval odds
- Bank statement health — average daily balances and deposit frequency matter
- Industry type — some industries are considered lower risk regardless of credit
Best Funding Options for Bad Credit Businesses
1. Revenue-Based Financing (MCA)
A Merchant Cash Advance advances you a lump sum in exchange for a percentage of your future daily credit card or bank deposits. Approvals are based almost entirely on revenue — credit scores as low as 500 are accepted by many MCA providers. The tradeoff is cost: factor rates typically range from 1.15 to 1.45, making this one of the more expensive options.
2. Invoice Financing
If your business invoices other businesses (B2B), you can borrow against your outstanding receivables. The lender advances 70–90% of the invoice value and collects directly from your customer. Credit score requirements are minimal because the invoice itself is the collateral.
3. Equipment Financing
Equipment loans are secured by the equipment itself, which dramatically lowers lender risk. Borrowers with scores in the 550–600 range can often qualify, especially if the equipment has strong resale value. Terms of 2–7 years are common.
4. SBA Microloans
The SBA Microloan program offers up to $50,000 through nonprofit intermediary lenders. These lenders are mission-driven and often work with borrowers who have credit challenges, particularly if you're a minority-owned, women-owned, or veteran-owned business.
5. Business Line of Credit (Alternative Lenders)
Several fintech lenders offer revolving lines of credit with credit score minimums as low as 580. Rates are higher than bank lines, but the flexibility of drawing only what you need — and only paying interest on what you use — makes this a popular option for managing cash flow.
What Documents Do You Need?
Regardless of which product you pursue, prepare these documents before applying:
- 3–6 months of business bank statements
- Most recent business tax return
- Government-issued ID
- Voided business check
- Business license or formation documents
Having these ready speeds up the process significantly — at UrFunded, most applications with complete documentation receive a decision within 24 hours.
How to Improve Your Approval Odds Right Now
Even if you apply today, taking these steps can improve your offer terms:
- Increase your average daily bank balance — even a modest increase signals stability to lenders
- Reduce NSF (non-sufficient funds) incidents — these are major red flags in bank statement reviews
- Separate personal and business finances — a dedicated business checking account is essential
- Dispute errors on your credit report — incorrect derogatory marks can be removed quickly
The Bottom Line
A bad credit score is a hurdle, not a wall. The right funding product — matched to your revenue, industry, and business age — can get you the capital you need while you work on rebuilding your credit profile. UrFunded's advisors specialize in exactly this situation: finding the best available offer from our network of 3,000+ lenders, regardless of where your score sits today.