Business Loans with Bad Credit: Your Options in 2026

Business Loans with Bad Credit: Your Options in 2026

A low credit score does not have to be a dead end for your business financing goals. While it is true that traditional banks reserve their best terms for borrowers with excellent credit, the lending landscape has expanded dramatically. Today, multiple financing products are designed specifically for business owners who have credit challenges, and knowing your options can make the difference between growing your business and staying stuck.

This guide walks you through the financing options available when your credit is less than perfect, explains what lenders look for beyond the credit score, and shares actionable strategies for improving your odds of approval.

Understanding Credit Scores in Business Lending

Before diving into your options, it helps to understand how lenders use credit scores. Most business loan applications trigger a check of your personal credit score, and many also look at your business credit score if one exists.

Personal credit score ranges:

• 750+: Excellent. Access to every product at the best rates.
• 700-749: Good. Strong options across all lender types.
• 650-699: Fair. Most online lenders will work with you.
• 600-649: Below average. Alternative lenders and specific products remain available.
• 550-599: Poor. Fewer options, but financing is still possible.
• Below 550: Very challenging. You will need to focus on secured products, microloans, or non-credit-based financing.

The key insight is that credit score minimums are not universal. What disqualifies you at one lender might be perfectly acceptable at another. That is why shopping around — or working with a marketplace that connects you with multiple lenders — is critical.

Loan Options for Bad Credit Borrowers

Merchant Cash Advances

MCAs are one of the most accessible options for borrowers with low credit scores because the primary underwriting factor is your daily credit card sales volume, not your credit history. If your business processes a healthy amount of card transactions, MCA providers focus on that revenue stream to determine how much you can borrow and how quickly you can repay.

• Minimum credit score: Often none; revenue is the primary factor
• Amounts: $5,000 to $500,000
• Funding speed: Same day to 2 business days
• Cost: Higher than traditional loans; factor rates of 1.1 to 1.5

Revenue-Based Financing

Similar to MCAs, revenue-based financing ties repayment to your monthly or daily revenue. Lenders connect to your bank account to analyze cash flow patterns, and the decision is based more on your business performance than your personal credit history.

• Minimum credit score: 500 to 550
• Amounts: $5,000 to $500,000
• Funding speed: 1 to 3 business days
• Repayment: Fixed percentage of daily or weekly revenue

Short-Term Online Loans

Many online lenders specialize in working with borrowers who have imperfect credit. They use alternative data points — bank account activity, revenue trends, industry performance — alongside the credit score to make decisions. While rates will be higher than what borrowers with excellent credit receive, these loans are far more accessible.

• Minimum credit score: 550 to 600
• Amounts: $5,000 to $250,000
• Terms: 3 to 18 months
• Funding speed: 1 to 3 business days

Equipment Financing

Equipment financing can be easier to obtain with bad credit because the equipment serves as collateral. If you default, the lender can repossess and sell the equipment to recover their loss. This built-in security means lenders are willing to accept more credit risk.

• Minimum credit score: 550 to 600
• Down payment: 10 to 30 percent for lower credit scores
• Terms: 1 to 7 years
• Best for: Businesses that need specific equipment to generate revenue

Microloans

Nonprofit microlenders, including those in the SBA microloan program, often serve borrowers that traditional lenders will not touch. These organizations prioritize the borrower's character, business plan, and community impact alongside financials.

• Minimum credit score: Varies; some have no minimum
• Amounts: Up to $50,000 (SBA microloans); varies for other programs
• Terms: Up to 6 years
• Best for: Startups, very small businesses, and underserved communities

Secured Business Loans

If you have assets to pledge as collateral — real estate, equipment, inventory, or a personal savings account — a secured loan reduces the lender's risk enough that they may overlook a low credit score. The collateral gives the lender a recovery path if you default, which fundamentally changes the risk equation.

• Collateral types: Real estate, equipment, inventory, cash deposits
• Minimum credit score: Varies widely based on collateral value
• Rates: Lower than unsecured bad-credit loans
• Risk: You lose the collateral if you default

What Lenders Look for Beyond Credit Score

When your credit score is low, other aspects of your application become even more important. Here is what you should emphasize:

Strong and consistent revenue. If your business deposits $20,000 or more per month consistently, many lenders will overlook a credit score in the low 500s. Revenue is the most persuasive evidence that you can repay a loan.

Positive bank account trends. Lenders analyze your bank statements for average daily balance, minimum balance, deposit frequency, and overdraft history. A healthy bank account with steady deposits and no negative balances tells a positive story even when the credit report does not.

Time in business. The longer your business has been operating, the more data the lender has to evaluate. A business with three years of history and a 560 credit score is a far more attractive borrower than a six-month-old business with the same score.

Industry and business model. Some industries have naturally higher approval rates because they have predictable revenue patterns and low default rates. Professional services, healthcare, and established retail stores tend to perform well.

Clear use of funds. A specific, well-justified reason for the loan — such as purchasing inventory to fill a large order — gives lenders confidence that the money will generate returns that support repayment.

Strategies to Improve Your Approval Odds

Start with your credit report. Pull your personal credit report from all three bureaus and review it for errors. Incorrect late payments, duplicated accounts, and outdated information are more common than you might think. Disputing and correcting errors can boost your score by 20 to 50 points.

Pay down revolving debt. Your credit utilization ratio — the percentage of available credit you are using — is a major factor in your score. Paying down credit card balances below 30 percent of your limit can produce a quick score improvement.

Avoid new credit applications. Each hard inquiry can drop your score by 5 to 10 points. In the months before applying for a business loan, avoid opening new personal credit cards or other credit accounts.

Build business credit separately. Open trade accounts with suppliers who report to business credit bureaus. Pay every invoice on time or early. Over six to twelve months, you can build a business credit profile that stands on its own merits.

Offer a larger down payment. Putting more money down reduces the lender's exposure and demonstrates your commitment to the investment. For equipment financing, increasing your down payment from 10 to 25 percent can turn a denial into an approval.

Provide a co-signer or guarantor. If you have a partner, investor, or family member with strong credit who is willing to co-sign, their credit profile can offset your weaker score.

Consider a smaller loan amount. Lenders are more willing to take a risk on a $25,000 loan than a $250,000 loan. If you can start with a smaller amount and repay it successfully, you build a track record that supports larger requests in the future.

The Cost Reality

It is important to go in with realistic expectations. Loans for borrowers with bad credit carry higher costs — there is no way around that. Higher interest rates, factor rates, and fees are how lenders compensate for the additional risk.

However, the cost of a loan must be weighed against the cost of not having the funds. If a $50,000 working capital loan at a 25 percent APR lets you fulfill a $200,000 contract, the math works out decisively in your favor. The key is using the capital productively so that the returns exceed the cost of borrowing.

Building Toward Better Terms

Think of your first bad-credit loan as a stepping stone. Repay it on time and in full, and you accomplish two things: you solve your immediate funding need, and you build a repayment track record that improves your position for the next loan. Many business owners who start with high-cost alternative financing work their way to conventional bank loans within one to two years.

How Brevo Capital Helps

At Brevo Capital, we work with lenders across the credit spectrum. When you submit your application, we match you with lenders most likely to approve your profile, whether your credit score is 750 or 520. No judgment, no wasted time applying to lenders who will not work with you.

Apply today and see the options available to you right now.