Can You Finance a Business With Bad Credit?

The digital economy in which we find ourselves makes it incredibly easy for people to start a business. There are plenty of tools and self-service agencies out there designed to facilitate the entire process from ideation to documentation and even implementation. There are marketing agencies of all shapes and sizes for just about any market that exists, and there’s a niche market for just about every product and service imaginable. However, the one barrier that many would-be entrepreneurs run into is financing. No matter what the idea is, it’s likely going to require some sort of financing. With so many consumers having a sub-par credit score, you may be wondering if you can finance a business with bad credit. 

A credit score is more powerful than many of us realize. It can dictate your eligibility for credit cards, personal loans, and more importantly things like cars and houses. Having a bad credit score can be a difficult thing to work around. Unfortunately, a bad credit score can also make it rather difficult to secure financing for a business. Although, it’s worth noting that when there’s a will, there is also very often a way. 

Gauging Where You’re At

Let’s be real, when you’re considering securing financing for a business, you’re going to need to know where your credit score currently is. If your credit-score is considered in the mid-range, and your business plan is rock-solid, you may not run into as many issues securing business financing as you think. Making use of personal or business credit reporting services can help you keep track of your credit score on a monthly basis. 

However, if your credit score truly is low, then there are some barriers that you’re going to need to work to overcome. Again though, nothing is impossible for the truly determined. When considering your business financing options with a low-credit score, your first option may be low-credit loans. 

These are loans offered by financial institutions that are typically designed to serve a market of people with lower credit scores. There are, of course, some stipulations. The amount of the loans are typically on the lower end, and the interest rates can be relatively high. These are considered fail-safe implementations on the side of the bank, to try and prevent loans defaulting. 

There are plenty of options to consider when it comes to low-credit loans, but be sure to do your research and read the fine print before signing any dotted lines. 

Other Qualifiers to Consider

The good news is that your personal credit score is only one of the factors that comes into consideration when applying for business financing. There are actually a lot of other factors that come into play. For instance, the amount of current revenue that your business is pulling in is a major consideration that financiers will take into account. This isn’t all, either. The profit margins of your organization, and the quality of your product or service are all factors that come into play. 

Even current collateral and valuation can come into play when it comes to securing business financing. So if your personal credit score is a little low, but your business is rocking and rolling, you may not have any trouble at all securing the business financing you need. 

Crowdfunding as an Option

Let’s say your business isn’t quite off the ground yet, and your credit score isn’t that great either. Well, if you’re passionate about your idea and you’re confident that you can rally a consumer market behind you, crowdfunding has taken a myriad of projects from the ground floor to a national scale. 

Crowdfunding is the process of generating business finances directly through an inspired consumer market. Inspired entrepreneurs can take their ideas and create campaigns around them. Utilizing platforms like Indiegogo, SeedInvest, and GoFundMe, these campaigns are brought directly to the public who can pick and choose which products they want to fund. Creators typically reward consumer investors with perks depending on the level of investment they pledge. 


Micro-loans are another option for entrepreneurs who have low or sub-par credit scores. These loans are on the smaller side, normally under $50,000, and come with a variety of terms that need careful consideration. 

However, some businesses don’t need that much start-up capital, therefore business valuation is important. The micro-loans are typically much more accessible. As such, a micro-loan could be the perfect launch point for your business finance journey. 

Finishing Up

A bad credit score makes everything a little bit more difficult. However, a bad credit score isn’t the end-all-be-all, not by any means. Plus, there are plenty of ways for consumers to even improve their credit scores. 

Entrepreneurs need to get used to rejection and to creative problem-solving. Working to secure business financing with the obstacle of a bad credit score could actually teach you a few valuable lessons to take into the future.