How to Get a Business Loan with Bad Credit in 2025

Having bad credit doesn't mean your business funding dreams are over. In fact, there are more options available today than ever before for entrepreneurs with credit challenges.

Understanding "Bad Credit" in Business Lending

First, let's define what lenders consider "bad credit":

• ●Poor: 300-579
• ●Fair: 580-669
• ●Good: 670-739
• ●Excellent: 740+

While traditional banks typically require scores of 680+, alternative lenders have opened up options for business owners across the credit spectrum.

Best Funding Options for Bad Credit

1. Merchant Cash Advance (MCA)

MCAs are the most accessible option for bad credit business owners. Instead of focusing on your credit score, MCA providers look at:

• ●Monthly credit card sales
• ●Time in business
• ●Daily deposits
• ●Overall revenue trends

Requirements:

• ●3+ months in business
• ●$10,000+ monthly revenue
• ●Active business bank account

2. Invoice Financing

If you have outstanding invoices from creditworthy customers, you can get funded based on their credit—not yours.

How it works:

1. ●Submit your unpaid invoices
2. ●Receive 80-90% of invoice value immediately
3. ●Get the remainder (minus fees) when customer pays

3. Equipment Financing

The equipment itself serves as collateral, reducing the importance of your credit score.

Benefits:

• ●Lower credit requirements
• ●Equipment secures the loan
• ●Tax advantages (Section 179)

4. Revenue-Based Financing

Payments adjust based on your monthly revenue, making this ideal for businesses with fluctuating income.

Tips to Improve Your Approval Odds

1. ●Show Strong Revenue: Clean, consistent bank statements matter more than credit for many lenders
2. ●Offer Collateral: Reduces lender risk and improves terms
3. ●Explain Credit Issues: Be upfront about past problems and show recovery
4. ●Start Small: Build payment history with a smaller loan first
5. ●Get Your Documents Ready: Bank statements, ID, business proof

Avoid These Mistakes

• ●Applying everywhere: Multiple applications hurt your credit
• ●Ignoring total cost: Factor rates can be expensive—calculate true APR
• ●Taking more than needed: Start conservative
• ●Not reading terms: Understand default provisions

Building Business Credit

While getting funded now, also work on building business credit:

1. ●Get a DUNS number
2. ●Open trade lines with reporting vendors
3. ●Get a business credit card
4. ●Always pay early or on time

Conclusion

Bad credit is a hurdle, not a dead end. With the right approach and funding partner, you can get the capital your business needs to grow.