Opportunity can appear whenever you’re not searching for it. If you want to expand your business or create a new start-up, you wonder where to start. Generally, you’ll need funding, which often means getting a small business loan. Still, you know that you have bad credit, so you worry if it’s possible.

What Credit Score Is Needed for an SBA Loan?

If you’ve only been in business for a year or less, you’re not going to have a business credit score. Reporting agencies don’t have enough information on you about how you manage debt. Lenders are going to look at the personal credit score instead to see if you qualify for the loan. Traditional lenders want you to have a minimum personal credit score of about 650 before approving any loan. Some may even need a 680 score or higher.

If you have been in business for more than a year, lenders might factor in personal and business credit scores. Most lenders focus on that business credit score. You can also focus on going to alternative financing sources, including online lenders. Other financial indicators can include your credit score, business receivables, and your revenue.

How Can I Get Approved for a Small Business Loan?

Many people don’t realize that it is possible to seek out and find a bad credit loan. Small business owners with bad credit should follow a few simple steps.

Check Scores

The first step is to check your credit scores, paying close attention to the business credit score (if you have one). Those with poor credit can still get copies of their report. Review it for any potential errors. If you find one, make sure you contact the credit bureau to dispute the mistake. This may not help you learn how to get a business loan, but it ensures that you know where you stand.

Infographic showing how to influence your credit score.

Infographic by experian.co.uk showing how to influence your business’ credit score

Research Options

If you’re like most people, you know it is hard to get bad credit loans. Small businesses must be careful to get a business loan that is going to give them the capital they need for the lowest repayment terms.

Write Your Business Plan

Most lenders give business loans to those who seem serious. You may want a copy of your business plan and send it with the application for a small loan for bad credit.

If a poor credit score tends to be from money-management issues, your small business plan shows that you understand those mistakes and aren’t going to do that with this financing option.

Offer Collateral

Learning about how to get a loan for business is a great first step. Once you know what to do, you may need to offer collateral, especially if you want a business loan with bad credit. It’s best to avoid any personal assets like a home. If the business fails, you also lose your house. Instead, focus on business loans that let you put up equipment as your collateral.

Factors to Consider

When applying for business loans, it’s important to focus on a few things:

  • The loan term is essential. Try to choose short-term loans if you can pay them back on time. Mid-term options are also available and can be repaid in two to five years.
  • Focus on the APR and interest rates. Be prepared to pay higher interest if your credit is bad. If possible, try to improve your credit score before taking out a loan.
  • Companies with strong revenue can still find it hard to be approved for a loan when their cash flow is poor. Lenders want you to have enough money to cover everyday expenses and pay off the goal.

Consider your loan options and work with alternative lenders. You may qualify for a business line of credit from one source and not another.

Types of Loans

There are countless ways to get money for your business, even if you have bad credit. A business credit card might be the best choice for you. You’ve got access to capital and can also improve your credit scores for your company by making payments on time. If you’re looking for financing options for your start-up, this is a great choice. Just make sure that the credit card you pick reports on-time payments to the major reporting agencies because not all of them can. Also, credit cards allow you to obtain a cash advance.

You can also apply for a short-term loan, even if you have credit issues. Many alternative and traditional lenders off this service with terms anywhere from six to 24 months. Sometimes, lenders can automatically withdraw the payments from the daily/weekly/monthly bank balance.

A short-term line of credit might also be a good idea. With this, you can use similar terms with short-term loans, but they use revolving credit like credit cards and aren’t installment loans. A business owner is likely to use them when they want working capital to help pay for inventory or payroll needs.

Invoice financing is another short-term financing option. You don’t buy invoices as with invoice factoring. Instead, you work with a financing company that advances the value of the invoices. You still collect the payments from your customers, which allows you to pay off the loans and the fees associated with it. This may be a great choice if you have been turned down by traditional loan lenders.

Infographic showing how invoice factoring works.

Infographic by handle.com showing how invoice factoring works.

What Is the Easiest Business Loan to Get?

Business loans might not be easy to obtain, but there are a variety of options out there. Usually, the easiest one to receive is a microloan or short-term loan. Consider going to Bluevine or Kabbage to check your eligibility and compare requirements. Borrowers can match with a lender based on approval rates. It’s a unique site that can help keep costs low and make it easier to find the right options.


Getting a business loan with bad credit can be easy. Be careful with the application process and research your options. Lenders offer money to those with good credit and those who have made a few mistakes. When you’re focused on business loans for bad credit, make sure that you focus on the interest rate and improve your credit report. Pay close attention to your credit history and fill out the loan application honestly.

Consider alternatives, such as a merchant cash advance and other business financing options. You’re sure to find small business loans that can boost your company and help you more.