Bad Credit Small Business Loans

Financing options for small businesses with poor credit

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Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.


US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.


For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.


For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.


Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.

On This Page:

  1. Bad Credit Business Loans from National Funding
  2. How to Get a Business Loan with Bad Credit
  3. Improve Your Chances of Obtaining a Business Loan
  4. Types of Bad Credit Business Loans
  5. Things to Consider When Applying
  6. What Lenders Look at on an SMB Loan Application
  7. How to Get a Better Business Loan in the Future
  8. Bad Credit Business Loans FAQs

Obstacles for Small Business Loans with Bad Credit

Credit scores act as a calling card for small businesses, and the wrong score can complicate business financing. As all too many small business owners have discovered the hard way, borrowing small business loans with bad credit can be an uphill battle.  Banks and other traditional lenders are constantly looking to reduce risk. The last thing they want is to give money to an individual or business that may not be able to pay it back.

Credit scores have become an integral part of analyzing the risk associated with a borrower. While obtaining a small business loan has always come with its own unique challenges, financial crises in recent years have put traditional lenders even more on guard.

bad credit business loanAs a business owner, having access to the finances you need is essential. A bad credit score doesn’t stop you from occasionally needing an injection of funds to grow and support your business. You may need funds to ensure business success, yet you may not be able to obtain financing because you or your business is dealing with obstacles in the here and now.

National Funding understands how frustrating this can be, and has dedicated itself to making financing options available to business owners of all stripes, even those with less than perfect credit.

Bad Credit Business Loans from National Funding

We offer a variety of alternative lending solutions that can be custom-tailored to your needs as a business owner. Regardless of low FICO scores, National Funding’s working capital loans for poor credit feature simple paperwork, fast turnarounds, and fixed payments.

Contact National Funding today to explore your options for bad credit small business loans.

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Why Your Credit Score Matters

Even though you're seeking funding to support a business, most lenders will consider your personal credit score when evaluating a small business loan application. Your credit score is determined by a variety of factors, known as the 5 C’s of credit: character, capacity, capital, conditions and collateral. These characteristics examine how reliable you are at repaying your debts, how many payments you’ve made on time and your debt-to-income ratio, among other considerations. While there are several credit scoring models that may be used to determine your creditworthiness, the most common model is the FICO score.

Here are the different FICO credit score ranges:

  • Exceptional (800 - 850)
  • Very good (740 - 799)
  • Good (670 - 739)
  • Fair (580 - 669)
  • Poor (300 - 579)

The term “bad credit” usually refers to a FICO score of 300 - 629 and is a common reason why traditional lenders reject small business loan financing. However, even with a lower score, you may be able to secure a bad credit business loan from an alternative lender that focuses more on your business' future than on what’s influenced your credit score in the past.

See if you qualify now.

How to Get a Business Loan with Bad Credit

You can obtain the capital you need to develop and grow a successful business, even if you have bad credit. There are essentially three steps to securing a small business loan with bad credit:

  1. Know Your Personal Credit Score

    Personal and business credit scores help lenders determine how risky it may be to lend money. Since these scores can influence your ability to acquire business funding, knowing your credit score before applying for a loan can help you determine the best financing options to explore.

  2. Research Your Options Based on Eligibility Requirements

    For each type of financing, there are specific requirements you'll have to meet to acquire approval. Traditional business loans are often based on the following factors:

    • Personal credit score
    • Years in business
    • Annual revenue

    Research the requirements for each type of small business financing you're considering to determine which bad credit small business loans give you the best odds for approval.

    Talk to a loan specialist at National Funding for personalized advice on your financing options.

    Apply Now

  3. Choose the Best Option for Your Business

    There are a broad range of financing options for business owners with bad credit. When exploring alternative financing options, consider not only the eligibility requirements and repayment terms, but also the lender’s reputation. Read borrower reviews and speak with service representatives. Make sure that your lender is committed to supporting you in your journey to greater success and has a proven track record of satisfied customers.

Improve Your Chances of Obtaining a Bad Credit Business Loan

Applying for a small business loan requires preparation, especially if you have less-than-perfect credit. Before applying, consider taking a few steps to improve your chances of approval and secure the best terms possible.

  1. Provide Collateral

    An unexpected downturn in business can leave a borrower unable to repay a loan, even with a great credit score. One way to increase your chances of acquiring funding is to provide collateral. There are two options:

    • Invoice financing. If you have unpaid customer invoices, some lenders may approve your loan based mainly on the value of your invoices as collateral. The financing company advances a certain percentage of each invoice and charges a service fee.
    • Equipment financing. If your goal is to secure funding for new equipment, you may consider applying for equipment financing. With this type of collateral, the equipment you finance serves as collateral for your loan. If you default on your loan, the lending company will seize the equipment to recover their losses, but your personal assets will remain protected.

    Ask a loan specialist which type of financing is right for you.
    Apply Now

  2. Use a Co-Signer

    In this scenario, another person agrees to take on partial responsibility for a small business loan by “co-signing” the agreement. A co-signer is typically an individual with a favorable credit score or steady source of income who can handle loan payments if the primary borrower cannot.

Types of Bad Credit Business Loans

Besides the requirement that funds be used for business-related purposes, small business loans have many similarities to personal loans. Types of bad credit business loans offered by alternative lenders include:

Short-Term Loans

A short-term business loan provides a lump sum of capital that the borrower agrees to pay back over a fixed amount of time on a specific payment schedule. Each payment the borrower sends to the lender includes the principal amount plus any interest owed for the period.

Short-Term Business Line of Credit

When a lender issues a short-term business line of credit, the borrower may access funds on a continual basis up to a specified approved amount. Like a credit card, the borrower is only charged interest on the open balance.

Collateralized Loans

If you secure your bad credit business loan with collateral, you’re giving the lender the right to seize collateral to recover their losses if you’re unable to pay your loan back. The loans are also commonly referred to as secured business loans.

Merchant Cash Advances

A merchant cash advance offers a lump-sum loan in exchange for a percentage of future credit and debit card receivables. Merchant cash advances tend to be easy to apply for but have steeper interest rates, making them one of the more expensive financing options over the lifetime of the loan.

Working Capital Loans

Working capital loans are used to finance everyday business operations like wages, inventory, taxes and a range of other day-to-day costs. Unlike some loans, they are not used to pay for investing or other long-term assets. Working capital loans from National Funding can provide up to $500,000 to support business needs right now, quickly and with minimal paperwork.

See how much funding you qualify for.

Apply Now

Things to Consider When Applying for a Small Business Loan

If you’re looking for a business loan and have bad credit, there are several factors that may influence your approval odds as well as the terms of your loan.

The Relationship of Personal Credit to Business Loan Approval

If your business has no credit history, traditional lenders will use your personal credit score to assess overall creditworthiness and eligibility for a small business loan. It’s a good idea to work on improving your personal credit score so you’ll have plenty of options when applying for a small business loan.

The Relationship Between Credit Scores and Interest Rates

Business owners with great credit generally receive the best interest rates on their loans. There’s a greater chance your loan will include a higher annual percentage rate (APR) if you have a lower credit score.

The good news is that securing a loan with manageable terms can help improve your credit score. Regardless of what factors contributed to your credit score in the past, if you are approved for a bad credit business loan, each on-time payment can help raise your credit score while providing the financing you need.

Alternative Lenders Vs. Traditional Banks

Traditional lenders like banks and credit unions tend to have strict eligibility requirements for loan approval. They also tend to be slower and require more documentation. Alternative lenders may offer benefits compared to traditional lenders, including:

  • Faster turnaround times
  • Less documentation required for approval
  • Faster access to funds, if approved
  • Flexible terms that meet your specific needs
  • Higher approval rates

Age of Business

Traditional lenders tend to lend to well established small businesses to reduce their risk. As a result, younger small businesses may have a harder time meeting a bank’s strict lending standards. Alternative lenders, on the other hand, actively cater to underserved small business owners. National Funding offers financing for businesses that have been in operation for as little as one year.

Other types of lending solutions young businesses may consider include:

  • Business credit cards. These cards can be a practical solution for building your business credit score while having access to extra capital. To obtain one, you'll need a federal tax ID number and business bank account.
  • A secured personal credit card. Secured cards can help you build better personal credit before applying for a loan.

Small Business Loan Costs

Beyond the principal amount, loans often include additional costs you must consider. By keeping loan costs to a minimum, you’ll have more capital to reinvest in your business.

  • Annual percentage rate. Your APR is the interest rate you pay on your loan annually.
  • Down payment. While down payment requirements vary, the average amount a borrower will need to put down is 25 percent. In certain instances, a small business loan down payment may be covered by collateral.
  • Factor rate. Typically used for merchant cash advances, a factor rate determines how much interest a borrower will owe. A factor rate is measured by business stability, average monthly profits, type of industry, and years in operation.
  • Origination fee. An origination fee is a charge for processing a new small business loan. Some lenders waive the origination fee, while others incorporate the fee into the overall loan balance.
  • Underwriting fees. These fees are collected by the underwriters who review, verify and approve the information provided in a small business loan application and recommend terms for financing, if approved.
  • Closing costs. These fees include costs associated with finalizing a loan, such as loan-packaging fees, business appraisals, or recording fees.
  • Other fees. Additional fees associated with a small business loan may include check processing fees, prepayment fees, and late payment penalties.

Compare Options to Determine the Best Loan for Your Needs

Your decision to obtain financing for your business is important. Consider the different factors when evaluating loan options.

Short-Term vs. Mid-Term Repayment

A short-term loan typically needs to be repaid within one year, while a mid-term loan usually has up to a five-year repayment period. The eligibility requirements, interest rates and loan amounts can vary. Carefully think about what repayment time frame works best for your needs as a business owner and the impact on the overall cost of any loan you accept. For example, the repayment terms for short-term working capital loans from National Funding are one year or less for an initial loan.

Interest and Fees on Open Balances

Assess how much interest and fees you’ll be charged on open balances. If you take out a longer-term loan, your monthly payment may be lower, but you may have to pay more interest in the long-run. Alternatively, if you take out a short-term loan, you’ll have higher payments but pay less interest overall.

Loan Limits

If a lender doesn’t extend financing in the amount your business needs, consider creative funding sources. Or, look for ways to cut costs and reduce the amount you need. Even if you obtain a loan for less than you originally wanted, securing an initial loan can help you build better credit and potentially secure more funding with a second loan or renewal later on.

What Lenders Look at on an SMB Loan Application

Beyond your credit score, lenders may consider a range of factors. Traditional lenders tend to request more information, while alternative lenders require less. For example, at National Funding, we ask for limited information in order to provide better speed and service. We generally look at a business's annual revenue, cash flow trends, and credit history of both the business and the owner.

Annual Revenue

Your business’s annual revenue is one of the most important eligibility factors of a bad credit small business loan application. In most instances, if you’re approved, the amount you’ll qualify for will usually be around 8% -12% of your business’s annual revenue.


Even if your annual revenue is high, some lenders will also want to know how profitable your business is. Your chances of approval could be increased if your business is profitable. If your business has demonstrated significant growth in the last 3 months or more, it could improve your chances of securing a loan even more.

Current Debt Obligation

You may have difficulty obtaining multiple loans especially if your original lender placed a UCC lien on your business. If a lender approves you for a second business loan, it's important to remember there are risks to your business and credit if you take on more debt than you can realistically and responsibly pay back.

Cash Flow

Your ability to manage your cash flow may be important to potential lenders. Since every lender’s primary concern is your ability to make loan payments, demonstrating that your business keeps enough money on hand to afford payments may improve your chances of qualifying.

Credit History

Most lenders will examine your credit report to determine if you’ve ever had a bankruptcy, foreclosure or another red flag. But remember, less-than-perfect credit won't always disqualify you from getting approved for the funding you need, especially with lenders like National Funding who offer bad credit small business loans.

Business Plan

National Funding does not require it, but some lenders may want to review your business plan to better understand your business details. Your business plan should be presented in concise yet detailed terms, and the amount of funding you’ll need and why should be clearly explained.

How to Get a Better Business Loan in the Future

To qualify for a loan with better terms, you need to demonstrate that you’re a responsible borrower. If you’re denied a small business loan or think you’ll need to borrow again, use these ideas to improve your chances of obtaining a loan with better terms the next time you apply.

Improve Personal Credit

Business Credit ReportsYour personal credit matters, even if you’re applying for a business loan. If you have less-than-perfect credit, get proactive about improving your score by following these best practices:

  • Always make payments on time
  • Keep balances below 30% of your total credit limit
  • Don't open too many new lines of credit at once
  • Actively monitor your credit score and dispute suspicious or false activity

In the United States, three major credit reporting bureaus Experian, Equifax, and TransUnion offer a range of free services to help you monitor, manage, and improve your credit score. Visit each of their websites to check your current credit report and ways to improve it.

Establish and Build Business Credit

You can also set up and build credit for your business. Building business credit can take time and resources but may give you a better chance of securing funding than personal credit alone.

Establishing business credit usually involves incorporating your business, getting a federal tax ID number, opening a business bank account, and securing various lines of credit for your business. Even if you don’t qualify for a small business loan, you may still qualify for a business line of credit, which could improve your chances for a loan over time.

Like all credit, you want your business's credit to remain in good standing. Follow the best practices for improving personal credit above to maintain a strong business credit score, too.

Assess Your Business Plan

You may find you need to lower the amount of capital you request to improve your chances of approval. If so, reassess your current business plan to look for areas you can cut costs, such as using social media to market your business or building your own website.

Prove Your Creditworthiness

Consider building a team of experienced business partners to boost your creditworthiness. Lenders may take the total personal income and collateral of each business owner into account when determining eligibility for a loan. You can also collect reference letters from current creditors and vendors to demonstrate your trustworthiness and ability to repay financial obligations.

Get Creative with Funding Options

Even if you’re approved for a loan, you may not secure the full amount you need. The good news is that after you secure and pay off your first business loan, your improved credit score may help qualify you for more funding and better terms on a second loan or renewal.

If you need additional funding, you may consider asking family, friends, or private investors to invest in your business. You can also seek funding through a crowdfunding platform like Kickstarter or GoFundMe. As with all financing options, you must convince others to invest in your business and make sure you understand the full terms and costs associated with creative funding sources.

If you’re looking for a business loan with bad credit, compare your options with National Funding. See how much funding you qualify for by filling out our brief online form today – your current credit score will not be impacted. A loan specialist will reach out to discuss your options and help you find the right small business financing options in as little as 24 hours.

Take your business to the next level with support from National Funding:

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Can I get a business loan with bad personal credit?

Yes! Although getting approved for a business loan is easier with great credit, there are options to get a business loan with bad credit. If you have bad personal credit, you may have to look beyond traditional lenders and consider alternative lenders. Alternative lenders usually have bad credit small business loan options for business owners with less than stellar credit.

What credit score is needed for a business loan?

Generally, the higher your credit score, the more likely you are to be approved for a loan. However, there are options for business loans with bad credit. For example, some lenders may approve you for a loan with a Poor Credit Score (300-579) if your business is profitable and you have a high annual revenue.

Does a business loan affect personal credit?

Your personal credit may be affected by a business loan. This is usually dependent on the structure of your business and whether or not you have personal responsibility for the loan. Reasons you may be personally responsible for a loan include signing a personal guarantee to pay back the loan if the business cannot or if you used a personal credit card or funds to fund the loan.

Is it hard to get a Bad Credit Business Loan?

Not always! Many small business owners associate getting a loan with weeks of applications, sharing financial documents and waiting to hear if they’ve been approved. This is typically the case with traditional lenders. Many alternative lenders offer a quicker turnaround time for the application process. At National Funding, our simple application process is completed online and you can even be approved in as little as 24 hours.

Do I qualify for a Small Business Loan?

With so many different small business loan options, many small business owners can qualify for some types of business funding. Even if you have poor credit, you may be able to get approved for a bad credit small business loan. Speak with a Loan Specialist today to learn about National Funding’s small business loans for bad credit.

What’s needed for a Small Business Loan?

Each lender will have different requirements for a small business loan. Traditional lenders may require a good to excellent credit score, collateral and your business plan. On the other hand, alternative lenders tend to require less for a small business loan. At National Funding, we provide a simple, easy online form to apply for a business loan and customize our loans to meet your needs.

What’s needed to open a business bank account?

To open a business bank account, you generally need personal identification, business documents like a business license or articles of incorporation and an Employer Identification Number (EIN) or other tax ID.

Can you start an LLC with bad credit?

Yes! Your credit score shouldn’t affect filing for an LLC or obtaining an Employer Identification Number.

Do SBA loans require collateral?

Many Small Business Administration (SBA) loans require collateral for approval. If your business doesn’t have the required collateral, you can personally guarantee the SBA loan. However, this can complicate your business and personal finances. If you don’t have the required collateral for an SBA loan, consider looking at other financing options, such as a bad credit small business loan from an alternative lender.

How much down payment is required for an SBA Loan?

There are several types of Small Business Administration (SBA) loans offered by lenders, and some of them do not require a down payment. The majority of SBA loans, however, do require a down payment in addition to collateral. Most SBA down payment requirements are between 10% and 20%.

How do I qualify for a small business grant?

Unlike a loan, a small business grant does not need to be repaid. Sound too good to be true? It’s incredibly difficult to qualify for a small business grant. In fact, the government doesn’t offer grants for starting a business, paying off debt or covering operational expenses. The few businesses that do qualify for small business grants are usually heavily involved in scientific research and development. Most small business owners should look for a favorable small business loan instead of a grant for things like paying unexpected bills or expanding to a new location.

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