How to Get Business Funding with Bad Credit in 2025

A poor personal credit score is one of the most common reasons small business owners believe they can't access capital. But the reality in 2025 is more nuanced — and more favorable — than many business owners realize.

The traditional bank loan model, which weights credit score heavily, represents only a portion of the business funding landscape. A growing segment of lenders and funders now use revenue-first underwriting — evaluating your actual business performance rather than a three-digit number that may not reflect your current financial health.

Why Bad Credit Doesn't Have to Block Your Business from Funding

Personal credit scores were designed to assess individual creditworthiness over time. They reflect missed payments, high utilization, and past financial stress. But they don't capture the full picture of a business:

• A restaurant doing $60,000/month in card sales with a 540 FICO owner
• A contractor with $250,000 in outstanding invoices and a 580 credit score
• A seasonal retailer with strong summer revenues and a 510 personal score

All three would be declined by most traditional banks. But all three have viable funding options through alternative funders who underwrite based on business performance.

Business Credit vs. Personal Credit: Know the Difference

Before exploring funding options, it's worth understanding that business credit and personal credit are separate systems. Your personal FICO score (from Experian, Equifax, TransUnion) is different from your business credit scores (from Dun & Bradstreet, Experian Business, Equifax Business).

Many funders that work with "bad credit" borrowers are referring specifically to personal credit scores below 580–620. If you have a strong business credit profile — even with weak personal credit — your options expand significantly.

If you're just starting to build business credit, consistent, on-time payments to vendors who report to business credit bureaus are the fastest path to building a track record.

Funding Options Available for Bad Credit Businesses

1. Merchant Cash Advance (MCA)

The merchant cash advance is the most credit-flexible funding option available to small businesses. Funders evaluate 3–6 months of bank statements and daily deposit patterns. Credit scores as low as 500 are frequently approved for businesses with $10,000+ in monthly revenue.

• Typical funding: $5,000–$500,000
• Speed: Same day to 48 hours
• Min. revenue: ~$10,000/month
• Min. time in business: 3–6 months

2. Working Capital Loans

Some working capital lenders specialize in credit-impaired borrowers. These are short-term business loans (3–18 months) underwritten with heavy emphasis on cash flow and monthly revenue trends. Rates are higher than traditional loans, but approval is accessible.

3. Equipment Financing

Equipment financing is easier to qualify for with bad credit because the equipment itself serves as collateral. If your business needs vehicles, machinery, or technology, equipment loans are one of the most accessible paths for borrowers with challenged credit.

• Typical funding: $5,000–$5M+
• Collateral: The financed equipment
• Credit: More flexible — 550+ in many cases

4. Revenue-Based Financing

Similar to an MCA but often structured with fixed daily or weekly payments rather than a percentage of sales. Revenue-based financing is evaluated almost entirely on monthly revenue. For businesses generating $20,000+ per month, this can be an excellent option regardless of credit.

5. Invoice Factoring

If your business operates B2B and has outstanding invoices, invoice factoring lets you sell those receivables for immediate cash. The factor underwrites your customers' creditworthiness, not yours — making it one of the most credit-agnostic funding options available.

What Lenders Actually Look at for Bad Credit Applicants

When traditional credit metrics are weak, revenue-based funders focus on:

• Monthly revenue consistency: Are your deposits relatively consistent month over month?
• Average daily balance: Do you maintain positive balances, or are you running near zero regularly?
• NSF frequency: Non-sufficient fund events are a major red flag even for bad-credit funders
• Time in business: 6+ months is the minimum for most; 1+ year opens significantly more options
• Industry risk: Some industries (cannabis, adult, gambling) have higher barriers regardless of revenue
• Existing advance load: Having multiple active MCAs is a common disqualifier

How to Strengthen Your Application with Bad Credit

Even with a low credit score, there are concrete steps you can take to improve your odds and terms:

1. Clean up your bank statement. Reduce overdrafts and NSF events in the 2–3 months before applying. Funders look at the trend, not just the average.
2. Demonstrate revenue growth. If your deposits are increasing month over month, lead with that narrative.
3. Apply through a platform that shops multiple funders. Rather than applying to one funder and getting declined, a platform like OneDay Capital simultaneously matches you to funders whose credit parameters fit your profile.
4. Start smaller. A smaller advance with successful repayment builds your track record. Many businesses take a $15,000 first advance, repay it, and return for $50,000 at better rates.
5. Offer collateral if you have it. Equipment, receivables, or business assets can unlock better terms even with weak personal credit.

OneDay Capital's Revenue-First Approach

At OneDay Capital, our AI platform evaluates your business's actual cash flow and revenue patterns — then matches your profile against 50+ funders to find options where you genuinely qualify. We don't make you fill out 10 applications and collect 10 credit hits. One application shows you what's available given your real financial picture.

Many of our funding partners specialize in business owners who've been declined elsewhere. Getting declined by a bank doesn't mean you have no options — it often just means you need a different type of funder.

Frequently Asked Questions