6 Best Bad Credit Business Loans

Having bad credit doesn’t rule out getting a business loan. While banks and other traditional lenders may have stricter eligibility requirements, some alternative lenders specialize in working with businesses with less-than-perfect credit.

In this guide, we’ll compare loans from six reputable business lenders and show you how to get business loans for bad credit.

Summary: Business loans for bad credit

• Journey Capital – Best for fast funding
• Advance Funds Network – Best for flexible financing
• Merchant Growth – Best for unsecured financing
• Loans Canada – Best for startups
• 2M7 – Best for merchant cash advance
• SharpShooter – Best for term loans

Best bad credit business loan with fast funding

Alternative lenders are faster than banks and credit unions when it comes to approvals and funding. Because they have less strict requirements and require fewer documents, they can complete the process within 24 to 72 hours, even for bad credit applicants. Some lenders can provide a quote right after you apply without affecting your credit score.

8.6 Great

Go to site

$10,500 – $500,000
Loan amount

8% – 29%
APR

6 – 24 months
Term

• Key Facts
• Pros + Cons
• Details

Journey Capital is an online business lender that is headquartered in New York City, but it also has Canadian offices in Toronto and Montreal. It takes about 10 minutes to fill out an online application, and loan options include business term loans, business lines of credit and flex funds advances (small business advances with flexible terms and daily payments). However, it's worth noting that Journey Capital may be less flexible than some other lenders on this list because you'll need a credit score of at least 550 to apply for financing. Full Review

• Easy application process
• Get money within 24 hours once approved
• No personal collateral needed to apply for a loan.

• Must have a minimum credit score of 550
• High business revenue requirements
• Not suitable for startups.

APR	8% – 29%
Loan Amount	$10,500 – $500,000
Loan Term	6 – 24 months
Loans Offered	Unsecured Term Secured Term Line of credit Merchant cash advance
Min. Credit Score	550
Turnaround Time	in as little as 24 hours
Serviced Provinces/Territories	All provinces and territories
Requirements	- 6 months in business - Minimum $120,000 annual gross revenue - 550+ credit score

Best business loan for flexible financing

There are several ways to inject financing into your business, such as merchant cash advances, term loans, lines of credit and invoice factoring. What you’ll get approved for when you have bad credit will depend on what reduces risk for the lender. Generally, financing that’s secured by collateral, such as equipment, cash and customer invoices, is easier to get approved for.

8.1 Great

Go to site

$10,000 – $1,000,000
Loan amount

Starting at 8%
APR

3 – 24 months
Term

• Key Facts
• Pros + Cons
• Details

If your business has a low credit score, Advance Funds Network might be a great option to get the funding you need. They offer a variety of loan options without strict credit score requirements, making it easier for struggling businesses to qualify. Plus, their application process is quick and hassle-free, with approvals in as little as 60 minutes. Full Review

• Bad credit business loans available
• Fast access to funds
• Easy to apply

• High revenue requirement
• If you don't qualify for direct funding, you may be referred to a third-party lender

APR	Starting at 8.00%
Loan Amount	$10,000 – $1,000,000
Loan Term	3 – 24 months
Loans Offered	Unsecured Term Secured Term Line of credit Merchant cash advance Equipment financing
Min. Credit Score	500
Turnaround Time	As fast as 4 hours
Serviced Provinces/Territories	Canada-wide
Requirements	minimum of 6 months in business with an annual revenue of at least $120,000

Best unsecured business loan for bad credit

If you need an unsecured business loan and you have a low credit score, you’ll have a much better chance of getting approved by alternative lenders than financial institutions. Rather than honing in on your credit score, alternative lenders will take a look at your overall financial situation. They can consider your application as long as you can demonstrate you have the means to repay what you borrow. However, watch out for steeper rates.

7.9 Great

Go to site

$5,000 – $800,000
Loan amount

12.99% – 39.99%
APR

6 – 24 months
Term

• Key Facts
• Pros + Cons
• Details

Founded in 2009, Merchant Growth specializes in fast financing solutions for small businesses. There's no collateral required to apply for a loan, and bad credit won't automatically disqualify you from qualifying for financing. Once you're approved, the money you borrow will be available to use within 24 hours. Full Review

• Fast access to funds
• Easy online application process
• Flexible financing to suit bad credit
• No collateral needed.

• High rates for bad credit
• Not suitable for startups
• Monthly sales requirements apply.

APR	12.99% – 39.99%
Loan Amount	$5,000 – $800,000
Loan Term	6 – 24 months
Loans Offered	Unsecured Term Line of credit Merchant cash advance
Min. Credit Score	550
Turnaround Time	as little as 6 hours
Serviced Provinces/Territories	All of Canada
Requirements	- Operating for at least 6 months - Canadian based business - 550+ credit score - $10,000 in monthly sales

Best bad credit business loan for startups

It can be more difficult to get financing as a startup because new businesses may not be generating as much revenue as more established businesses. Applying to a business loan broker such as Loans Canada can help startups narrow down their choices and find a lender willing to provide financing.

8.1 Great

Go to site

$500 – $50,000
Loan amount

9.99% – 35%
APR

4 - 60 months
Term

• Key Facts
• Pros + Cons
• Details

Loans Canada is an online loan broker that allows you to fill out a single application and then compare loans from a network of lenders. There are options available for good and bad credit, with same-day approval and next-day funding if you need money in a hurry. You can access installment loans, lines of credit, commercial mortgages and a range of other business financing options through Loans Canada, and applying through the broker won't incur any fees. Full Review

• Free to use
• Large lender network
• No hard credit check required to apply
• Easy to compare multiple loans.

• Your business must be at least nine months old
• Monthly sales requirements apply
• Home-based businesses not eligible.

APR	9.99% - 35.00%
Loan Amount	$500 - $50,000
Loan Term	4 - 60 months
Loans Offered	Unsecured Term
Min. Credit Score	410
Turnaround Time	48 Hours
Serviced Provinces/Territories	All provinces
Requirements	- Operating for at least 9 months - Operating Canadian Business Bank Account - Over $10,000 in monthly sales ($120,000/year)

Best merchant cash advance for bad credit

A merchant cash advance is a common type of business financing for bad credit. You get a lump sum that you repay based on a percentage of your future sales (via customer card receipts). You make repayments daily, weekly or monthly. A fee is added to the percentage of your sales.

7.2 Great

$5,000 – $300,000
Loan amount

Undisclosed
APR

Flexible
Term

• Key Facts
• Pros + Cons
• Details

2M7 Financial offers an alternative to business loans in the form of merchant cash advances. It has been in business in Canada for at least 13 years and has a 97% approval rating on all submitted applications. Apply online and get funding on the same day. Full Review

• Same day funding
• Easy online application process
• Repay based on your cash flow
• No collateral needed

• Expensive
• Short-term financing

APR	1.18 - 1.48 factor rate
Loan Amount	$5,000 - $300,000
Loan Term	Flexible
Loans Offered	Merchant cash advance
Min. Credit Score	550
Turnaround Time	A few hours up to one business day, depending on how accurate and complete your application is
Serviced Provinces/Territories	Canada-wide, excluding Quebec
Requirements	Must be located in Canada, excluding Quebec, operational for a minimum of 3 months, without any open bankruptcies, earning at least $15,000 per month in revenue and accepting credit and debit cards

Best business term loan for bad credit

With business term loans, you get a one-time loan upfront that you’ll pay back weekly, bi-weekly or monthly over several months or years. If you have bad credit, lenders will approve you for smaller amounts. You can increase your chances of approval if you sign a personal guarantee, offer a down payment or provide collateral.

8.7 Great

$1,000 – $300,000
Loan amount

5.49% – 22.79%
APR

12 - 60 months
Term

• Key Facts
• Pros + Cons
• Details

SharpShooter Funding is an online lender that provides funding for businesses across Canada. This lender bases its decisions on the overall financial health of your business rather than your credit score, and you can apply online to get pre-approval within minutes. There's also a wide range of bad credit business loans available, from term loans to lines of credit. Full Review

• Get the money you need in less than three days
• Bad credit isn't a factor for most loans
• Easy online application process
• No collateral required.

• High rates for bad credit
• Some products (such as long-term loans) have stricter eligibility requirements
• No branches if you prefer to deal with your lender face-to-face.

APR	5.49% - 22.79%
Loan Amount	$1,000 - $300,000
Loan Term	12 - 60 months
Loans Offered	Unsecured Term Merchant cash advance Invoice factoring
Turnaround Time	48-72 hours
Serviced Provinces/Territories	All of Canada
Requirements	- Have a Canadian bank account - Place of business located in a Canadian province/territory - In business for at least 100 days - Show a minimum of $4,166 in monthly deposits ($49,992/year) - No minimum required credit score

• How we selected top business loans for bad credit

  We’ve chosen the products on this page based on the providers available through Finder and online in the Canadian business loans marketplace. These loans are not representative of the entire market. When choosing top business loans for bad credit, we considered each lender’s loan amounts, turnaround time, APRs, fees, transparency, customer service, ease of application and perks.

  No single business loan will be the best choice for everyone, so compare your options before applying.

Tips to get approved with bad credit

If you want to improve your chances of getting approved for a business loan, even with bad credit, consider the following tips:

• Consider alternative lenders. Banks often have strict credit and eligibility requirements, but alternative lenders are often more willing to work with borrowers who have lower credit scores or limited credit histories.
• Borrow only what you need. Lenders may see a smaller loan as less risky, improving your chance of approval. It can also reduce the amount you need to pay each month, making it easier for you to afford.
• Limit your applications. Try to apply with no more than two lenders at a time. Multiple applications can impact your credit score if lenders perform a hard credit check and may make it appear that you’re relying heavily on a loan.
• Prepare a detailed business plan. Lenders may ask for a business plan demonstrating how you intend to use the funds and how the loan will support your business. Include details about your revenue, expenses, growth plan and repayment strategy.
• Apply with a co-signer or guarantor. Some lenders allow a business owner to apply with a co-signer or guarantor who has stronger credit. This person will be responsible for the debt if you don’t repay the loan, so make sure they understand the commitment before applying.

What’s considered bad credit?

Lenders will generally look at the personal credit histories of company owners and, if the business is established, they will also look at the business’s credit score and credit report. If you have bad credit – which could come from defaulted payments, missed payments, late payments, multiple credit inquiries and/or a high credit utilization ratio – you may find it difficult to be approved for small business financing, but you have options.

Personal credit score

A bad personal credit score is typically one that’s below 600 (ratings usually range from 300 to 900, with 900 being the best). Credit scores can vary between Canada’s two main personal credit reporting bureaus: Equifax and TransUnion.

Business credit score

Business credit scores can vary between Canada’s three main business credit reporting bureaus: Equifax, TransUnion and Dun & Bradstreet (D&B).

Equifax issues four different business credit scores:

• Credit Information score (0-70 where 41+ is high risk)
• Business Failure Risk Score (1,001-1,722 where higher is better)
• Commercial Delinquency Score (101-662 where higher is better)
• Payment Index score (0-99 where 60+ is high risk)

TransUnion’s business credit score ranges from 400-800, with 800 being the best.

The D&B Commercial Credit Score ranges from 101-690, with 690 being the best.

What’s the difference between a personal and business credit report?

Both your personal and business credit report contain information that helps lenders and creditors determine if they want to do business with you. Your personal credit report is based on historical information about your credit accounts such as student loans and credit cards. On the other hand, your business credit report is based only on accounts taken out under your business’s name.

• Personal credit report. Your personal credit report includes your name and other personal information, details of consumer credit accounts you’ve held, any negative listings such as defaults or missed payments, and information on the public record such as bankruptcies and court judgements.
• Business credit report. Your business’s credit report will include the company’s structure and its shareholders, the company’s credit information including applications and defaults.

Where can you get business loans with poor credit?

If you have bad credit, you can get a business loan from an alternative lender. Here’s why many business owners turn to alternative lenders.

• Bad credit history isn’t a determining factor — you just need to show that your business is able to repay.
• Responsible borrowers can be rewarded with better rates the next time they apply for a loan.
• Loan terms are tailored to what you can afford.
• Many alternative lenders don’t require security for the loan amount.
• The application is quick, often with same-day approval.

Types of bad credit business loans

Alternative lenders offer different types of business loans for poor credit. These include the following:

Secured bad credit business loans

If you apply using assets as collateral, the lender may be more ready to approve your application. Here are a few things to keep in mind when applying for a secured business loan:

• Assets such as business equipment, vehicles, property and funds in savings accounts can be used as collateral for a secured business loan.
• These kinds of loans are generally granted by banks, but there are also non-bank lenders who may be able to help. Terms and conditions differ, so it’s a good idea to shop around for the loan that suits your budget.
• Since your application is secured with collateral, you generally benefit from more competitive interest rates and flexible repayment terms.
• If you can’t make your repayments, the lender will sell your assets to cover what you owe.

Invoice factoring

If you have outstanding invoices that are locking up your cash flow, you can consider invoice factoring. Invoice factoring involves selling your unpaid invoices for a fee in order to receive the outstanding payments more quickly. This option is popular among business owners because:

• Bad credit history isn’t a factor.
• No real estate is required as collateral.
• You have the option to finance some or all of your invoices.
• You can enter into an ongoing arrangement with the factoring company.

Merchant cash advances

A merchant cash advance allows you to borrow cash based on your daily credit card and debit sales. Because these loans are guaranteed by your card sales, you don’t need to put up an asset as collateral to secure the loan.

Features of merchant cash advances include:

• Fast approval, with same-day funding offered in some cases but money usually available within three business days.
• Your monthly repayment amount varies as it is calculated as a percentage of your monthly card sales.
• Bad credit is usually OK.
• High borrowing limits are available from many lenders.
• You’ll need to watch out for high interest rates and fees.

Equipment financing

If you need to buy equipment for your business, a lender may be able to lend you a percentage of the value of the equipment.

• You have a higher chance of getting financing with bad credit if the equipment has a lower price tag and would be easy to resell if you default.
• Expect to be charged higher rates and receive a lower percentage of the value of your equipment.

How to compare bad credit business loans

There are a few bad credit business loan options you can consider. Here’s how to find the one that best suits your business needs:

• Flexibility to fit your business cash flow. Small business loans vary in repayment terms, loan amounts and other features. Your cash flow estimates should show when periods of fluctuations occur, and therefore what type of repayment structure and loan type may suit your business.
• Affordability of the loan. The APR includes the interest rate and fees that apply to the loan, giving you an indication of the true cost of the loan. You can use a business loan calculator to help you determine whether you can afford it.
• Loan term. While banks tend to offer minimum loan terms of one year with standard business loans, alternative lenders have been offering terms as short as three months, giving you a range of terms to choose from. You also have business lines of credit and overdrafts to add to your comparison — each has no set due date.
• Features that suit your needs. Identifying your business needs should help when comparing your options. If you have a startup, you may be unsure of your cash flow projections and may want the ability to increase your loan in the future. If you’re taking out a loan to buy stock that will be sold in the next six weeks, you probably won’t want a loan lasting longer than a year.

What do I need to apply for a bad credit business loan?

This depends on the type of lender you apply with. Some new lenders on the market let you connect your business’ accounting software into their systems to allow the lender to make a decision in minutes. Other lenders need your business documents and financial statements to be able to make a decision.

Information you’ll need includes:

• Your full name, contact information and SIN number.
• Your full business name, address, phone number and email address.
• Your industry and the date you started your business.
• The annual revenue of your business.
• Your personal bank account information and income earned.
• How much you’re looking for in funding.
• How you intend to use your loan.

Learn more about business loan requirements and what to expect when applying.

How to get a business loan with bad credit

If you’re searching for a bad credit business loan, follow these steps to find funding that suits your needs:

1. Check your credit score. Check your personal and business credit scores to find out exactly where you stand. This will also help you figure out which lenders may be willing to work with you.
2. Research loan types. Compare different types of bad credit business loans to decide which one best suits your needs. Are you looking for a conventional term loan, for example, or something a little more flexible like a merchant cash advance?
3. Compare lenders and loans. Next, research lenders that offer the type of loan you want. Compare loan APRs, amounts, terms and fees to find the best deal. And if you’re applying with an alternative lender, check to make sure they’re legit before handing over any personal information. Learn more about business loan scams.
4. Submit an application. Fill out an application form with your business and personal details. Depending on the lender, you may be able to apply online or be required to visit a branch.
5. Provide supporting documents. Submit any documents the lender requires to assess your application, including financial statements, your business plan and cash flow projections.
6. Get approved and funded. Turnaround time depends on the lender and the type of loan you apply for. While it may be possible to get approved and funded within 24-48 hours with an online lender, expect to wait longer if applying with a traditional lender.

How to improve your business credit score and boost your chances of approval

The better your business credit score, the better your chances of getting approved for a loan (and accessing larger loan amounts and lower interest rates). The tips below can help you ensure that your business credit score is in good shape:

• Pay on time. Make sure you pay all your bills and invoices on time to build business credit. Paying bills early can increase your score even further.
• Improve your personal credit score. If you’re a small business owner, your personal credit score can have a big impact on your business credit score. That’s why it’s a good idea to take steps to improve your credit score, such as correcting errors in your credit report and lowering your credit utilization ratio.
• Reduce your credit utilization. If your business credit cards are close to maxed out or you’ve used the full line of credit amount available to you, your credit utilization ratio will be high. This drives your credit score down, so reducing the amount of credit you access will help bring your score back up again.
• Check your credit report. It’s good practice to check your business credit report regularly and make sure all the details are correct. If there are any errors, you can dispute them to ensure that everything in your report is accurate.

Government small business loans for bad credit

The Canada Small Business Financing Program (CSBFP) is a federal government initiative designed to help small businesses get loans. How it works is that the Government of Canada shares the risk of loaning to small businesses with lenders, but the loans themselves are approved and administered by lenders.

Features of CSBFP loans include:

• Eligibility. Loans are available to Canadian small businesses and startups with gross annual revenue of less than $10 million.
• Two types of loans available. You can apply for a business term loan or a line of credit. Term loans can be used to buy commercial property and equipment, pay for leasehold improvements, or buy intangible assets and cover working capital costs. Lines of credit are designed to cover day-to-day operating expenses.
• Loan amount. The maximum amount you can borrow is $1.15 million. This includes a maximum of $1 million for a term loan (with further limits on specific expenses the loan can be used to cover), and $150,000 for a line of credit.
• Interest rates. Rates can be floating or fixed. For a term loan, the maximum floating rate is the lender’s prime lending rate plus 3%, and the maximum fixed rate is the lender’s single family residential mortgage rate plus 3%. Line of credit interest rates are limited to the lender’s prime lending rate plus 5%.
• Registration fee. A 2% registration fee applies to both loan types.
• Security. If you take out a term loan to buy property or equipment, the assets being financed must be offered as security. If you’re financing other expenses or opening a line of credit, the lender will take security on other business assets. Lenders also have the option to accept an unsecured personal guarantee on the loan.

The downside with the CSBFP loans is that they’re only offered by banks and credit unions, which have strict eligibility criteria. It may be difficult to get this loan with bad credit.

Frequently asked questions

• Can you get a business loan with bad credit in Canada?

  Yes, bad credit business loans are available in Canada. Several online lenders offer secured business loans, merchant cash advances and invoice factoring to borrowers with bad credit. You may also be able to access a loan through the Canada Small Business Financing Program.

• Can you get bad credit startup business loans with guaranteed approval in Canada?

  No. While there are many lenders who offer bad credit business loans, be very wary of any lender that advertises guaranteed approval. A responsible lender will always assess your financial situation before approving your application to determine whether you can afford to repay a loan.

• Can you get an unsecured business loan with bad credit?

  Yes, it is possible to get an unsecured business loan with bad credit from an online lender. However, watch out for high interest rates, and make sure the lender you're dealing with is legit before you apply.

• How fast can I get business loans with bad credit?

  It depends on the lender you choose and the type of loan you apply for. Some online lenders can provide funding within 24-48 hours, but in other cases it might take several business days before you can access the loan amount.

• Does my personal credit score affect my chances of getting a business loan?

  Yes. Lenders will typically review your personal credit history as well as your business credit when assessing your loan application. As a result, taking steps to improve your personal credit score can increase your chances of getting approved for a business loan.

• Can I use a personal loan to finance a business?

  You may be able to get a personal loan for business purposes depending on the lender you're applying with. Keep in mind that since these loans are designed for personal use, your personal credit score will be evaluated more heavily in the approval process. So you may be better off getting a small business loan if you have bad credit. Otherwise, consider bad credit personal loans.

• I need to purchase equipment. Should I purchase the equipment with a loan or a lease?

  There are some lenders that offer bad credit loans for the purchase of equipment. However, if you only need the equipment for the short-term or you're unsure if your business can afford the rates being offered, you can consider some lease options as well.

  These include installment plans, where the provider purchases the equipment on your behalf and you pay it off in regularly scheduled payments. There's also finance leasing, where the lender rents the equipment to you for an agreed-upon period.

Written by

Tim Falk

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Tim Falk is a freelance writer for Finder. Over the course of his 20-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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Leanne Escobal

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Leanne Escobal is a senior publisher at Finder with more than 13 years of experience in financial products and services, with a focus on content strategy and marketing. She has completed the Canadian Securities Course (CSC®) as well as the Personal Lending and Mortgages course through the Canadian Securities Institute. Leanne holds a Bachelor of Arts (Honours) in English literature and creative writing from Western University. See full bio

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