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Can I Get a Business Loan With Bad Credit?

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April 25, 2022

Most people know funding is one of the most important things for running a business. Thankfully, a few options are available to you if you want cash to fund your business. You may want to go the traditional route and apply for a business loan, but what if you have a less than stellar credit score?

Getting a business loan with bad credit

Operating a business with poor credit can be challenging. Many traditional banks and lenders require a minimum credit score to receive a business loan or business line of credit, leaving few loans for bad credit options. However, Good Funding was created to offer an alternative solution for small businesses, startups, or any business owner who may not meet the stringent requirements set by traditional lenders. We are here to tell you it is possible to get business funding with bad credit.

See how much you qualify for!

Credit Scores & Why They Matter

Even though Good Funding evaluates many factors besides credit score, knowing how your personal and business credit score can impact your ability to receive business financing is important. Most lenders consider credit history when evaluating any loan application. Your personal credit score is determined by the five C's of credit: character, capacity, capital, conditions, and collateral.

The Five C's of Credit:

  1. Character: Your credit history and how you've previously managed debt.
  2. Capacity: Your ability to repay loans. Capacity is based on comparing the amount of debt you have to your income.
  3. Capital: Any amount you are willing to put towards your loan. This could include savings, investments, and assets.
  4. Conditions: Other information a lender could use to determine if you qualify for a loan. For example, sharing your business plan with the lender could be helpful if you are applying for a business loan.
  5. Collateral: An asset a lender can take as security for a loan.

All of the factors above combined determine your creditworthiness. Credit scores can range between 300 and 850. The higher your credit score, the better your chance of getting approved for a traditional business loan.

What is considered a good credit score?

Lenders will set their own standards for what they will accept, but here is a general outline of what is regarded as a good or bad credit score:

  • Excellent Credit: 720 or higher
  • Good Credit: 690 to 719
  • Fair Credit: 630 to 689
  • Bad Credit: 629 or below

What credit score do you need for a business line of credit?

Each lender determines what credit score you need to be approved for a line of credit. Some lenders offer loans to borrowers with a credit score of 560, and some only lend to borrowers with a 660 credit score or higher. Good Funding evaluates many factors besides your credit report and balance sheet, plus we make the process quick and seamless from application to funding. There is no hard credit pull, and you can apply today and receive funding as soon as tomorrow.

Apply today and receive funds tomorrow

Credit Scores and Interest Rates

Some banks or lenders use your credit score as a benchmark to show an unlikely chance you will default on the loan, which is why businesses with good to excellent credit are often offered better interest rates. Good Funding recognizes other equally effective benchmarks when evaluating a business owner's ability to pay back funding, such as time in business.

Relationship between personal credit and business loan approval

If you don't have a business credit score or any credit history, the lenders will use your personal credit score and your total credit rating to determine your creditworthiness. Improving your personal financial situation and credit scores is also advisable before applying for a business loan.

How to choose the right bad credit business loan?

  1. Research - It is essential to understand what financing options you are eligible for; a poor credit record could cause difficulty getting approved for certain types of loans, such as an SBA loan. However, before you get discouraged, some lenders such as Good Funding want to help small business owners and startups get the funding they need to move their businesses forward.
  2. Determine how much funding you need - Perhaps you are looking to invest in a new piece of equipment or just looking to maintain cash flow during the off season; either way, understanding how much you are looking to borrow is critical as you evaluate loan options. If you are unsure what makes the most sense for your business, our Good Funding Specialists can help you determine the best option to fund your business.
  3. Get your funds - Once you have weighed all factors, the next step is to begin applying for your business funding. During the application process, be mindful that some lenders do a hard credit pull, and too many credit pulls can negatively impact your credit score. Good Funding will never pull your personal credit or business credit. Good Funding also offers funding in as little as one business day, no matter your credit score, increasing your cash flow and getting you back to running your business sooner.

Image for funding that moves business forward

Ready to move your business foward?

Start your application today, and you could get funding in as little as one business day!
Apply Now

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