Can you get a business loan with bad credit?

Yes. Businesses with personal credit scores as low as 500–580 can access financing through SBA microloans, CDFI nonprofit lenders, invoice factoring (no credit requirement), equipment financing (collateral-based), and some online lenders. The trade-off is higher rates and smaller loan amounts. A score of 600–640 opens significantly more options, including online term loans and lines of credit from lenders like OnDeck and Fundbox.

What credit score is considered bad for a business loan?

For business loans, a personal credit score below 640 is generally considered 'bad credit' — though the threshold varies by lender. Traditional banks typically require 700+. Most SBA lenders want 680+. Online lenders like OnDeck work down to 625; Fundbox to 600. Below 600, your realistic options are SBA microloans (575+), CDFI loans, equipment financing, and invoice factoring.

What is invoice factoring and do you need good credit?

Invoice factoring is selling your outstanding B2B invoices to a factoring company at a discount (typically 80%–95% of face value). The factoring company advances you cash immediately and collects from your customers. Because approval is based on your customers' creditworthiness — not yours — invoice factoring has no minimum credit score requirement. It works only if your business has outstanding invoices from creditworthy business customers.

How do I build business credit with bad personal credit?

Build business credit independently of your personal credit by: opening a business bank account; getting a secured business credit card and paying it in full monthly; establishing trade credit with vendors that report to Dun & Bradstreet (register a DUNS number for free); applying for a business credit card from a lender that doesn't require a personal guarantee; and paying all business obligations on time. Dun & Bradstreet Paydex scores build faster than personal FICO scores — consistent on-time payment can move you from no score to a Paydex of 80 in 12–18 months.

Bad Credit Business Loans 2026 — Best Options Below 640

A credit score below 640 doesn’t eliminate your business loan options — it eliminates the cheapest ones. The right approach depends on exactly where your score sits: 600–640 opens online lenders; 550–600 leads to CDFIs, microloans, and invoice factoring; below 550, collateral-based financing and nonprofit lenders are your realistic path. Here’s what’s available at each credit tier.

Lender Options by Credit Score Band

Credit Score	Best Options	Typical APR	Max Loan Amount
625–640	OnDeck, Fundbox, Bluevine	20%–50%	$250K
600–625	Fundbox, Credibly, National Funding	30%–75%	$150K
575–600	SBA microloans, CDFI loans, equipment financing	8%–30%	$50K–$250K
550–575	CDFI, nonprofit lenders, invoice factoring	10%–25%	Varies
Below 550	Invoice factoring (no min), co-signer, MCA (last resort)	Varies	Limited

Note on MCA: Merchant cash advances are technically accessible to almost any business with card revenue but are extremely expensive (effective APR of 80%–350%). They should be a last resort only.

600–640 Credit: Online Lenders Are Your Main Path

At 600–640, you’re in the “fair credit” range. Several legitimate online lenders will work with you:

OnDeck:

Minimum credit score: 625
Minimum time in business: 1 year
Minimum revenue: $100,000/year
Products: Term loans ($5K–$250K) and lines of credit ($6K–$100K)
Rates: Starting around 35% APR for term loans
Speed: As fast as same-day

Fundbox:

Minimum credit score: 600
Minimum time in business: 6 months
Minimum revenue: $100,000/year
Products: Line of credit (up to $150,000)
Rates: Starting around 4.66% for 12-week draws (approximately 24% APR)
Speed: Same-day to next-day

Credibly:

Minimum credit score: 600
Minimum time in business: 6 months
Minimum revenue: $180,000/year
Products: Working capital loans and merchant cash advances
Rates: Factor rates of 1.09–1.36 (term loans); higher for MCAs
Speed: 1–3 days

National Funding:

Minimum credit score: 600
Products: Equipment financing and working capital loans up to $500K
Best for: Equipment purchases with the equipment as collateral

550–600 Credit: CDFIs and SBA Microloans

At this credit level, the best options are mission-driven lenders designed specifically for underserved borrowers.

SBA Microloans (up to $50,000)

SBA microloans are distributed through nonprofit intermediaries — not through banks or the SBA directly. These intermediaries have more flexible underwriting than commercial lenders, focusing on your business plan and character rather than just credit score.

Maximum loan: $50,000 (average: ~$14,000)
Rates: 8%–13%
Terms: Up to 6 years
Credit: Many intermediaries work with 575+
Revenue: None required for startups
Free business counseling often included

Find intermediaries at sba.gov/microloans.

CDFI (Community Development Financial Institution) Loans

CDFIs are certified by the US Treasury and exist to serve borrowers that mainstream lenders overlook. They offer below-market rates with flexible underwriting.

Major CDFIs for bad-credit borrowers:

Accion Opportunity Fund — $5K–$250K; works with 580+ credit; available nationwide
Kiva US — 0% interest loans up to $15,000; funded through crowdfunding; no minimum credit score; takes 30–60 days
LiftFund — Southeastern and Texas-based; works with 550+ credit
Grameen America — Women entrepreneurs; group lending model; no credit minimum
Pacific Coast Regional (PCR) — California-based; low credit flexibility

Find CDFIs in your area at cdfifund.gov.

Invoice Factoring: No Credit Score Required

If your business sells to other businesses on credit terms (B2B invoicing), invoice factoring lets you convert unpaid invoices into immediate cash — with no credit check.

How it works:

You have $50,000 in outstanding invoices due in 30–60 days
A factoring company advances you 80%–90% ($40,000–$45,000) immediately
The factoring company collects from your customers
Once collected, they remit the remaining 10%–20% minus their fee (1%–5% of invoice value)

Cost example: $50,000 invoice, 3% fee = $1,500 cost to receive $50,000 in 24 hours instead of 45 days.

Approval is based on your customers’ creditworthiness, not yours. If you invoice Fortune 500 companies or government entities, you can factor invoices even with personal credit scores below 500.

Top invoice factoring companies: BlueVine (for invoices up to $5M), FundThrough, altLINE, RosenthalCapital.

Equipment Financing with Bad Credit

Equipment loans are collateral-based — the equipment you’re buying backs the loan, which makes lenders more willing to work with lower credit scores.

Minimum credit: 580–600 for most equipment lenders
Down payment: You may need 15%–25% down with poor credit vs. 10% for good credit
Rate impact: A 600 score pays 18%–30% vs. 4%–8% for a 720+ score — but approval is possible

See the full guide: Equipment Financing 2026 — Loans vs. Leases

Using a Co-Signer

A business co-signer (or guarantor) with strong personal credit can unlock better terms for a business with a poor credit history. The co-signer agrees to be personally liable if the business defaults.

Risks for the co-signer: The debt appears on their personal credit report. A missed payment damages their credit. A default means they’re responsible for the full remaining balance.

This is most common between business partners, spouses, or parents lending credibility to a child’s startup. Only use a co-signer who fully understands the financial risk.

Improving Business Credit While Borrowing

Having bad credit today doesn’t mean you’ll have bad credit in 18 months if you take deliberate steps:

1. Open a business bank account if you don’t have one. Some lenders won’t even consider you without a dedicated business account showing 3+ months of statements.

2. Get a DUNS number. Register for free at Dun & Bradstreet (dnb.com). This creates your business credit file. Without it, you have no Paydex score.

3. Establish trade credit. Apply for net-30 accounts with vendors that report to business credit bureaus: Uline, Grainger, Quill, and Amazon Business all offer net-30 terms that build business credit.

4. Get a secured business credit card. Put down a deposit ($500–$2,500), use the card monthly, and pay in full. Business card issuers that report to business bureaus include Wells Fargo and Bank of America.

5. Pay everything on time — or early. The Paydex score rewards early payment (score of 80 = paid on time; 100 = paid 30+ days early).

6. Repay any bad-credit loans as agreed. Even a high-rate OnDeck loan paid on time can improve your credit profile enough to qualify for better rates at renewal.

Consistent positive payment behavior over 12–18 months can move a business from “no credit / poor credit” to a Paydex score of 70–80 — enough to access community bank loans and SBA programs.

What “Bad Credit” Actually Means for Business Loans

Most lenders evaluate both personal and business credit:

Personal credit (FICO): Reflects your individual financial history. Dominates underwriting for businesses under 3 years old or with thin business credit.
Business credit (Paydex, Experian Business, Equifax Business): Reflects the business’s payment history with suppliers, lenders, and credit card issuers. More relevant for established businesses.

A business can have excellent business credit (Paydex 90) but a poor personal credit score, or vice versa. Online lenders typically rely more on personal credit; CDFIs and mission lenders often look at both with more flexibility.

Tax liens and judgments are separate from credit scores and can block SBA loan approval regardless of your credit score. Resolve or settle tax liens before applying for SBA financing.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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