Guide
Business loans with bad credit: what is real, what is not, and what it costs
Below about 600, the question stops being what rate you get and becomes which product will look at you at all. Here is the honest menu.
Everything on this page is more expensive than what a 700-score borrower gets. That is worth saying plainly, because most content on this topic is written to sell you the most expensive item on the list.
The menu, cheapest first
| Option | Realistic cost | What it needs | Speed |
|---|---|---|---|
| CDFI or SBA microloan | 8% to 13% | A plan, some of your money, patience | 2 to 8 weeks |
| Invoice factoring | 1% to 5% per 30 days | Creditworthy business customers | 3 to 10 days |
| Equipment financing | 12% to 30% | A resaleable asset, often 10-20% down | 1 to 10 days |
| Secured line or loan | 8% to 20% | Cash, securities, or real property as collateral | 1 to 4 weeks |
| Online term loan | 30% to 60% | 6+ months trading, $100k+ revenue | 1 to 3 days |
| Revenue-based financing | 20% to 120% effective | Platform revenue data | 1 to 7 days |
| Merchant cash advance | 40% to 350%+ effective | Card or bank deposits | Same day |
CDFIs deserve a paragraph of their own
A Community Development Financial Institution is a certified mission lender — often a nonprofit loan fund or a community bank or credit union — whose purpose is to serve borrowers and communities that mainstream finance underserves. They lend at single-digit to low-teens rates to businesses with credit that banks reject.
They are slower and they will ask more questions about your plan. In exchange you get money at a fifth of what an advance would cost, and usually a person who will explain what is wrong with your file. The CDFI Fund maintains a searchable list of certified institutions.
What to avoid
- Any upfront fee to "secure" a loan. Legitimate lenders take fees from proceeds or at closing. Advance-fee demands are the oldest fraud in this industry.
- Guaranteed approval. Nobody can guarantee approval before underwriting. Anyone saying so is either lying or selling something that is not a loan.
- Stacking. Taking a second and third advance while the first is outstanding is the single most reliable path from difficulty to insolvency.
- Credit repair that promises removal of accurate items. Not possible, and the fee is money you need elsewhere.
- Any contract you have not read in full, particularly the sections on default, confession of judgment, and personal guarantee triggers.
The ninety-day plan that changes the menu
If your need is not urgent, the highest-return work available to you is raising the score.
Pull all three reports
AnnualCreditReport.com, free, no card required. Dispute every genuine error.
Attack utilization
Get every revolving balance under 30% of its limit, then under 10%. This is the fastest lever and it reports monthly.
Stop applying for anything
Every inquiry is a small step backwards and they cluster visibly.
Separate business and personal
A business account, an EIN, and a card that reports to commercial bureaus. This is the foundation of ever escaping personal-credit dependence.
Set the target
600 opens online lenders and equipment financing. 640 opens some SBA. 680 opens most of the market. Aim at the nearest threshold, not at perfection.
Questions people actually ask
Can I get a business loan with a 500 credit score?
Realistically: invoice factoring if you invoice businesses, equipment financing with a meaningful down payment, or a merchant cash advance. A CDFI is worth approaching even at 500, particularly if the score reflects a specific past event rather than an ongoing pattern.
Do any lenders not check personal credit at all?
Invoice factors care mainly about your customers' credit, and some revenue-based providers underwrite primarily on platform data. Most will still pull your credit — they just weight it far less. "No credit check" advertising usually means "no hard pull at application", which is not the same thing.
Will a business loan help rebuild my personal credit?
Often not, because many business lenders report only to commercial bureaus. If rebuilding personal credit is a goal, ask whether the lender reports to consumer bureaus before you borrow — and if it is not part of the deal, use a secured personal card for that job instead.