Don’t have a good credit score and getting declined after applying for a business loan? Are you searching for how to get a loan with bad credit? You are in the right place. The Lender Radar team has worked with many private lenders in the US and Canada, and we have seen what really matters when approving loans for businesses with lower credit scores. In this guide, we will share insider tips to improve your approval chances, including choosing the right lenders, preparing your documents properly, and leveraging revenue-based financing options even with bad credit.
Getting a business loan with bad credit is challenging, but not impossible. Here’s what really works:
1. Focus on Revenue-Based Lenders
If you have a poor or bad credit score and are looking for a small business loan, the first step is to focus on lenders that offer revenue-based business loans. These lenders do not rely heavily on credit scores. Instead, they evaluate your monthly deposits and cash flow. If your business shows consistent revenue, your chances of approval increase significantly. Some lenders start with loans as low as $5,000, so if your business deposits around $10,000 per month, you have a good chance of getting approved.
2. Clean Up Your Bank Account
The first thing lenders review is your bank statements. If you have overdrafts, bounced payments, or negative balances in the last 30–60 days, most lenders will deny your loan – no matter how good your credit score or monthly deposits are. Keep in mind, multiple small deposits show consistent revenue and are better than one large lump-sum deposit.
3. Reduce Existing Debt
High debt or multiple open loans signals risk to lenders. When it comes to bad credit business loans, lenders mostly focus on your monthly revenue. Typically, they approve loans equal to 60–100%, sometimes up to 120% of your monthly deposits.
If you already have loans, a lender has to consider your ability to make payments using daily sales. This means your eligibility for a new loan decreases if you have existing obligations.
Also, loans in second or third position generally cost more than first-position loans because lenders view your profile as higher risk. The best strategy is to pay down or fully close existing loans before applying for a new one.
4. Prepare Accurate Documentation
Even with low credit, organized and accurate documents increase your chances of approval. Lenders need to see that your business is legitimate and your finances are reliable. Basic documents include:
- 3–6 months of business bank statements
- Business licenses and registration
Lender Radar Tips:
- Make sure your most recent bank statements are clean, with positive daily and ending balances. Avoid overdrafts or bounced payments.
- Some lenders may request personal and business tax returns, so keep them ready.
- Ensure you have online banking access, as lenders often verify accounts during final underwriting.
Having these documents ready and accurate shows lenders your business is trustworthy and financially organized.
5. Choose the Right Lender
Not all lenders work with bad credit. Focus on:
- Private lenders (Here is the list of top private lenders in the market)
- Revenue-based lenders
- Companies with flexible repayment options
This is the most important step to get approved with bad credit. Randomly applying without checking lender requirements can hurt your credit score if they pull your report unnecessarily.
- Before applying, especially with a low credit score, always:
- Review the lender’s eligibility requirements carefully.
- Call or email their customer support if the website doesn’t clearly state the criteria.
- Confirm exactly what they need to approve a loan.
Doing this ensures you apply only to lenders who are likely to approve you, avoiding unnecessary credit inquiries and improving your chances of funding.
6. Be Honest About Your Financial History
Lenders value transparency. Always disclose any past defaults, judgments, or payment issues upfront. Hiding problems can lead to automatic denial.
Before applying, also check if the lender funds businesses with previous defaults or judgments. If you submit an application without disclosing this, the lender may perform a hard credit pull to verify your background. This can lower your credit score and make your file appear riskier.
Being upfront helps lenders trust your business and improves your chances of approval, even with bad credit.
7. Start with Small Amount
If possible, apply for a smaller loan first. Repaying it on time builds your repayment history and demonstrates reliability to lenders.
Every on-time payment improves your profile and can help you qualify for larger funding in the future. Also, check if the lender reports to the major credit bureaus—if they do, timely payments can help raise your credit score over time.
Starting small is a smart strategy for businesses with bad credit to gradually improve approval chances
Conclusion
Getting a business loan with bad credit is challenging, but not impossible. By focusing on revenue-based lenders, keeping your bank statements clean, reducing existing debt, preparing accurate documentation, choosing the right lender, being honest about your financial history, and starting with a small loan, you can improve your approval chances.
Remember, every lender has different requirements, so research carefully and apply only to those who fit your business profile. Following these insider tips can help you secure funding even with a lower credit score and gradually build a stronger credit history for future loans.
Bottom line: Understanding what lenders look for and preparing your application properly is key to getting a business loan with bad credit.
