Bad credit business loans

Your credit history doesn’t have to lead to a dead end. There are a number of business loans you can apply for even with bad credit.

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By

Elizabeth Barry

Updated

Fact checked

Key takeaways

  • Your business credit score is not the same as your personal credit score.
  • While it may be more difficult to be approved for a business loan with bad credit, it's not impossible.
  • You can expect higher interest rates and stricter terms if your credit is poor.

Bad credit business loan options

1 - 6 of 92
Updated regularly
Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Lumi Unsecured Business Loan
Lumi logo
$5,000
$500,000
3 months to 5 years
2.5% establishment fee
Apply for up to $500,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
Go to siteMore info
Valiant Finance Business Loan Broker
Valiant Finance logo
$5,000
$20,000,000
3 months to 7 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 80 lenders. Loans between $5,000 and $20 million are available. Request a call – your loan can be funded in 1 business day.
Enquire now
ebroker Business Loan
eBroker logo
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Enquire now
ScotPac Boost Business Loan
ScotPac logo
$10,000
$500,000
3 months to 3 years
$0 application fee
A business loan for any industry. Borrow between $10,000 and $500,000, with approved loans funded within 24 hours. Minimum monthly turnover of $10,000 and 1 year of trading history required.
Go to siteMore info
Prospa Business Loan
Prospa logo
$5,000
$500,000
3 months to 3 years
3.5% origination fee
Small business loans are available from $5,000 - $500,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $5,000 is necessary.
Go to siteMore info
Zool Business Loan
Zool logo
$25,000
$2,000,000
6 months to 4 years
Apply for a loan from $25,000 to $2,000,000 Repayments are made in monthly instalments over a period of to 4 years.
More info
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Start comparing

Can I get a business loan with bad credit?

Yes! You may face some hurdles, but it's definitely not impossible to get a business loan with bad credit.

There are 2 versions of credit that you need to know: your personal credit score and your business credit score (we explain the difference further below).

Lenders will look at both of these scores to assess your risk profile. Although you may end up with higher rates or stricter requirements if one of these shows bad credit, you still have options.

What are my options to get a business loan with bad credit?

Secured bad credit business loans

A secured loan uses an asset as collateral and therefore is less of a financial risk to lenders. Keep in mind:

  • Assets such as business equipment, vehicles, property and funds in savings accounts can be used as collateral.
  • Terms and conditions differ, so it's a good idea to shop around for a loan that suits your budget.
  • You could receive more competitive interest rates with a secured loan.
  • If you can't make your repayments, the lender will sell your assets to cover what you owe.

Alternative lenders

There are a number of alternative financial lenders in the market who are willing to cater to businesses with less-than-perfect credit and no security. These alternative lenders include peer-to-peer lenders and non-bank lenders. Here's what you need to keep in mind:

  • Alternative lenders offer a small portfolio of loan products.
  • Bad credit isn't a determining factor. You need to demonstrate that your business has the capacity to repay the loan.
  • Interest rates for bad credit borrowers may be higher. Some lenders may opt for risk-based lending or personalised rates.
  • Loan terms may be shorter. Responsible borrowers may be rewarded with better rates the next time they apply for a loan.
  • You may not have to offer security for the loan.
  • The application is quick, often with same-day approval.

Invoice financing

If you have outstanding invoices tying up your cash flow, you could consider invoice financing. This is where you take out a loan against your unpaid invoices. You can convert some or all of your unpaid invoices into funds. This option is becoming popular as:

  • Your bad credit history doesn't play a role
  • No real estate is required as collateral
  • You will receive a certain percentage of the invoice, usually 80 to 90%; the remaining will be transferred to you once the customer pays, minus the company's fee
  • Turnaround times can be fast
  • You can enter into an ongoing arrangement with the financing company
Rebecca Pike's headshot
Our expert says: Improve your chance of approval

"As a business owner there are a number of different reasons you might need a loan. It's important before you apply that you figure out what you need the loan for. Is it general cash flow, is it for new equipment or a vehicle, or is it to expand your business?

The lender you're applying with may want to know the loan purpose and you'll need to back it up with business plans and financials. Especially as a borrower with bad credit the more you can give the bank to reassure them, the better."

Senior Money Writer

How can I compare business loans?

Here's what you need to keep in mind when comparing loans:

  • Does the loan meet my needs? You need to take into consideration why you need the loan. Is it for long-term investment, to upgrade equipment or to overcome cash flow shortages? Take the specific needs of your business into consideration and look for a loan suitable for those needs.
  • Can I afford the loan? What's the interest and comparison rate? The latter will give you an indication of the true cost of the loan. It includes interest and fees that come with the loan. You can use a business loan calculator to help you determine whether you can afford it. It's important to apply for a loan you can afford. If lenders feel you can't, they will reject your application. Additionally, getting into debt you can't afford will lead to long-term financial difficulties.
  • What is the loan term? How long do you have to repay the loan? It's important to take into account the loan term as this will determine how much interest you'll be paying over the years. This will add to the cost of the loan.
  • What is the eligibility criteria? Bad credit loans have a more flexible criteria, but you will still need to meet the lender's minimum requirements. Check the minimum monthly turnover and minimum operating period required. Only apply for a loan if you tick all the boxes.
  • What are the loan features? Does the loan offer features you would find useful? For instance, if you're a start-up, you may be unsure of your cash flow. If so, you may want the ability to top-up your loan. If you're taking a loan to buy stock that will be sold in the next 6 weeks, a loan with terms longer than a year may be unsuitable.
  • Are the repayments flexible? Do the repayment terms suit your business's cash flow? Some lenders may allow you to repay the loan daily, weekly, fortnightly or monthly. Does the loan give you the flexibility you need to manage your business?
1 - 2 of 2
Updated regularly
Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
ScotPac Invoice Finance
ScotPac logo
$10,000
$150,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
Go to siteMore info
ScotPac Selective Invoice Finance
ScotPac logo
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
Go to siteMore info
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What's the difference between a personal and business credit score?

The idea behind a credit report, whether business or personal, is to give lenders an indication of how risky the borrower is.

Your personal credit file will contain information on your individual consumer credit activities and your business credit file will contain information specifically about your commercial credit activities. Your business credit score does not impact your personal credit score, and vice versa.

Personal credit file

Your consumer credit file will include your personal details, your existing credit accounts, and any negative listings such as defaults or missed payments. It'll also include any consumer credit inquiries, like any time you've applied for credit even if it wasn't approved. It will also include information on public record such as bankruptcies and court judgements. It will also list whether you've operated a business before.

Business credit file

Your business credit file will contain company details, including information on company structure and current shareholders. It'll also include registered defaults, potential loan inquiries or any external administration that may be registered against your business. Additionally, any public record information, like any legal matters or action taken against your company by Australian Prudential Regulation Authority (APRA), will be included. Any information the Personal Property Security Register (PPSR) has on your company's possessions will also be on your credit file.

How can I improve my business credit score?

First of all, you should check your business credit report. Take a look at all your credit accounts and ensure the information is accurate. You should inform the credit reporting agency if there are any errors. This can include basic information like your name, address, or the amount of debt listed.

To improve your score, you can:

  • Make payments on time. Pay all your bills on time, including electricity, gas, rent and mortgage payments.
  • Reduce any credit card limits. The bigger the limit, the bigger the liability to lenders.
  • Pay more than the minimum on your credit card. Pay the amount in full, if possible. Paying off debt on time can help improve your score.
  • Limit how many credit applications you make. Applying for many loans in a short period of time will result in many hard credit checks which will impact your credit score.

If your application gets rejected, wait for 3 to 6 months before applying again. You can work on improving your credit score in the meantime.

Did you know?

You can check your personal credit score for free through Finder. You can download your entire credit report in a matter of minutes with no impact to your score. We'll then show you products that match your credit profile. Check it out here. If you want to find out your business credit score, see our guide for more information.

What should I be aware of before applying for a bad credit business loan?

  • Disreputable money lenders and loan sharks. Unfortunately, there are disreputable lenders that offer what appear to be attractive rates or financing for bad credit applicants. Be wary of any offer that seems too good to be true. Check if the lender is reputable and what its history is. You should also be wary of loan sharks who charge extremely high interest from desperate borrowers. Check if they're registered with the Australian Securities & Investments Commission (ASIC). The lender should also be easy to contact.
  • Getting into debt you cannot afford. You can calculate the total cost of the loan by using our business loan calculator. Check you can comfortably include your repayments in your budget.
  • Multiple applications. Every loan application shows up on your credit report. Several applications within a short period can have a negative impact on your credit score. This can make it harder for you to get a loan in the future. Select a single loan and lender that you're eligible for and that suits your needs and apply with them.
  • Long-term repercussions and legal issues. Once you sign a loan agreement, you are bound to its conditions. You will have to pay the loan and all the fees. Keep in mind that for unsecured loans, the lender can initiate legal proceedings against you if you don't repay the loan. It can also report the debt to a credit reporting body like Equifax and use the services of a debt collector. With secured loans, your loan security can be repossessed by the lender if you fail to make your repayments.

How can I apply for a bad credit business loan?

1. Decide what type of loan you need. Work out the loan type and how much you need to borrow. Don't forget to calculate your repayment costs.

2. Compare lenders and loan products. Don't forget to compare interest rates, fees and eligibility criteria. You can use the comparison table above.

3. Select a lender. Click "Go to site" to be directed to the lender's page, or "More info" if you want to read about the lender.

4. Prepare the required documentation. This can include proof of identification, financial statements for the last 3 years, your business plan, financial forecasts and personal financial information. You may need the help of a business accountant.

5. Apply. Most lenders have their applications online.

Frequently asked questions about bad credit business loans

Elizabeth Barry's headshot
Journalist

Elizabeth Barry is an experienced journalist with over 10 years of expertise in personal finance, contributing to outlets like the ABC, Sydney Morning Herald, and 7News. She holds a Master of Arts in Creative Writing and a Bachelor of Arts in Communication from the University of Technology Sydney, and has earned multiple award nominations, including a Highly Commended recognition at the 2017 Lizzies. Elizabeth began her career at Finder in 2013, progressing through roles to become Lead Editor, where she oversaw a wide range of personal finance coverage until 2024. See full bio

Elizabeth's expertise
Elizabeth has written 210 Finder guides across topics including:
  • Banking
  • Personal finance
  • Investing
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10 Responses

    Default Gravatar
    DesleyJuly 26, 2019

    I have a business loan on my property. I have a for sale contract on it, once I pay out my loan, I will clear $215k. I have only been working for 3 months in my new casual job and 3 years previously in my last job, but I am having trouble on finding someone to give me a credit card. Is there any bank/credit unions that would be flexible to help me? As I need the credit card to help with my move.

    Thank you.

      Default GravatarFinder
      JeniJuly 27, 2019Finder

      Hi Desley,

      Thank you for getting in touch with Finder.

      Sorry to hear about your difficulty in finding a credit card issuer to apply with.

      Since you’ve mentioned that you currently have a business loan, if your loan was with a bank, you may ask them about applying for a credit card. If you are self-employed or working part-time, you may need to provide your accountant’s information and previous Tax Assessments in order to verify your income. You may consider applying for low-income credit cards if your income is in a lower bracket. Otherwise, you may compare from our own top picks credit card.

      Once you’ve chosen a particular card, you can press the ‘Go to site’ button to apply. Please make sure though to read the eligibility criteria, features, and details of the card, as well as the relevant PDS/ T&Cs of the card before making a decision and consider whether the product is right for you. You may use refer to our credit card application tips.

      I hope this helps.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

    Default Gravatar
    IanApril 2, 2019

    I owe 57000 to a bank, but i’ve lost my job if i want to get a business loan in the future am i able to

      Default GravatarFinder
      MaiApril 3, 2019Finder

      Hi Ian,

      Thanks for reaching out.

      You can still get business loan even if you have a bad credit however, you may find it difficult to be approved as the lenders will be looking at your credit file and check your credit worthiness.

      The article on this page provides guidelines on how you can go about getling a business loans despite having a bad credit. It also discusses what can be the alternatives in case you gets declined.

      Hope this is helpful.

      Kind Regards,
      Mai

    Default Gravatar
    TanyaOctober 16, 2018

    I would like someone to talk to about purchasing an existing business

      Default GravatarFinder
      JohnOctober 17, 2018Finder

      Hi Tanya,

      Thank you for leaving a question.

      There are lenders and brokers that can help you buy an established business in Australia. You can use our table to help you find the right broker/lender for you. Once you have chosen a particular provider, you may then click on the “Go to site” or “Enquire now” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!

      Cheers,
      Reggie

    Default Gravatar
    MariaAugust 15, 2018

    I want to purchase an existing business. The owner is willing to pay 10% for me to obtain a business loan. The financials show 500k for 2 locations. Will a lender consider this if I am 1 year out of a chapter 7?

      Default GravatarFinder
      JoshuaAugust 26, 2018Finder

      Hi Maria,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      There are different things that a lender assesses when determining your eligibility for a loan. Even if you are one year of out bankruptcy, you might still be able to be approved for a loan provided that you have met other requirements. The bottom line is that if you can prove to the lender that you are able to make repayments then your chance of getting approved will increase.

      Of course, there are things you can do to ensure that you get a loan. For one, if you have a property which you can use as a security, then that would decrease the risk of lending you money. You may also want to present a business plan, detailed financials and financial forecasts to convince even further your lender to give you the funding.

      Aside from asking traditional banks, you may also try other financial lenders who might be more lenient when approving loans.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

    Default Gravatar
    KateMay 7, 2018

    I want to purchase an existing business. I have no collateral but my parents have offered to use a property as collateral for me. Will a lender consider this? I have financials for the business for the last 5 years and it turns over 700k pa.

      Default Gravatar
      ArnoldMay 8, 2018

      Hi Kate,

      Thanks for your inquiry

      Yes, there are lenders that will allow you to apply for a business loan with a property as collateral with the owner’s consent. To compare your options, please see our list of secured business loans. On the page is a secured business loans comparison tool you can use to see which lender suits you.

      You can click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.

      Hope this information helps

      Cheers,
      Arnold

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