How to Get a Business Loan With Bad Credit in 2025

Getting a business loan is challenging enough—but with bad credit, it can feel impossible. The good news is that in 2025, there are still multiple financing options available for entrepreneurs with poor credit histories. By understanding lender requirements and exploring creative funding solutions, you can still access the capital needed to keep your business running.

This guide covers the best ways to secure business loans with bad credit in 2025, practical tips to improve your approval odds, and alternative funding strategies.

Why Bad Credit Doesn’t Always Mean “No”

• Many lenders now focus on cash flow and revenue stability instead of only your credit score.

• SBA programs, online lenders, and microloan organizations often work with borrowers who have lower scores.

• Building a strong application with collateral or a co-signer can increase approval chances.

Loan Options for Bad Credit Borrowers in 2025

SBA Loans (with Preferred Lenders)
While SBA loans generally require good credit, some SBA-approved lenders consider applicants with lower scores if strong cash flow, collateral, or guarantors are in place. SBA microloans are especially useful for startups or very small businesses.

Online & Alternative Lenders
Companies like Bluevine, Fundbox, and OnDeck offer fast approvals and are more flexible about credit scores, instead reviewing revenue and bank statements. The trade-off is higher interest rates.

Community Development Financial Institutions (CDFIs)
CDFIs focus on underserved borrowers, including those with weak credit. They often provide technical assistance alongside funding.

Microloans & Nonprofit Lenders
Organizations such as Accion Opportunity Fund or Kiva provide small loans (up to $50,000) with flexible requirements, making them excellent for entrepreneurs with poor credit.

Merchant Cash Advances (MCAs)
These provide quick access to cash based on daily credit card or bank deposits. They are easy to qualify for but extremely expensive and should be considered only as a last resort.

Invoice Financing/ Factoring
If you have unpaid invoices, you can use them as collateral for quick capital. Approval depends on your customers’ credit, not yours.

Eligibility Factors Beyond Credit Score

Even with bad credit, lenders in 2025 will consider:

• Revenue strength: Consistent income streams matter.

• Time in business: More than 12–24 months helps.

• Collateral: Real estate, vehicles, or equipment reduce lender risk.

• Co-signer or guarantor: A partner with better credit improves approval odds.

• Industry type: Stable, low-risk industries are more attractive to lenders.

Steps to Get a Business Loan With Bad Credit (Featured Snippet Section)

1. Check your credit report for errors

2. Gather bank statements and revenue proof

3. Strengthen your business plan

4. Explore SBA microloans or CDFI programs

5. Apply with alternative or online lenders

6. Offer collateral or a co-signer if possible

7. Compare offers and review terms carefully

Tips to Improve Loan Approval Odds

• Show cash flow stability: Demonstrate deposits and recurring revenue.

• Pay down existing debt: Even small reductions boost your debt-to-income ratio.

• Strengthen your business plan: Lenders want to see how the loan fuels growth.

• Start small: Microloans and smaller amounts are easier to secure.

• Build relationships: Local banks, credit unions, and CDFIs often consider character and community impact.

Alternatives to Business Loans

• Business credit cards for bad credit: These may help build your score while covering smaller expenses.

• Crowdfunding: Platforms like Kickstarter or GoFundMe allow businesses to raise money from supporters.

• Grants: Federal, state, and private grants provide funding that doesn’t need to be repaid.

• Friends and family funding: Informal financing can work if managed transparently.

Future of Bad Credit Lending in 2025

• More digital lenders are adopting AI-based underwriting, giving borrowers with strong cash flow better odds even with bad credit.

• CDFIs and nonprofit programs are expanding to support underserved businesses.

• SBA is increasing accessibility for microloans and underserved entrepreneurs.

Conclusion: How to Get a Business Loan With Bad Credit in 2025

Bad credit doesn’t have to end your business financing journey. With SBA microloans, CDFIs, alternative lenders, and creative funding options, you can still access the capital you need. By strengthening your application, showing reliable revenue, and exploring flexible lenders, you can secure funding and work toward rebuilding your credit profile.

Ready to take the next step? Start with a free consultation at your local SBDC or CDFI, review SBA microloan options, and compare online lenders that work with low-credit borrowers. With preparation and persistence, financing your business in 2025 is possible.