Bad Credit Business Loans Guide in 2023

Do you have bad credit or defaults on your file but still need business finance?

Running a business is hard work; especially for small business owners who accept the vulnerability that comes with following their entrepreneurial dream. In today’s competitive economy, there are numerous risks that run hand in hand with opening your business along with the potential to become financially successful in the long-term.

Unless you inherit millions of dollars, the upfront costs associated with starting your own business usually require a large investment that is financed via a business start-up loan. While business loans certainly do help in the process of establishing your entrepreneurial vision, they also put your business in debt from the start.

With the combination of an unpredictable global economy plus startup capital, (the debt most business owners take on to start up their business) and other unpredictable risks, it’s not unusual for small businesses to accrue massive amounts of debt, default on their loan, and then suffer from low credit scores.

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The Traditional Bank Business Loan Won’t Work

As most traditional banks and lending agencies will base their loan approval decisions on credit worthiness and scores, many businesses that have defaulted on previous loans or who have a low credit score are simply excluded from financing options. Bad credit can affect even the very best businesses. When there are defaults on your business credit file a bank rejecting you for a business loan is the last thing you need.

Other businesses that are denied financing by banks and other traditional lenders, are forced to seek loans from individuals offering insanely high interest rates or strict terms and conditions that only push the business further into a financial hole. For a business that’s suffered through tough financial times and has one (or several) negative marks on their credit history, what options are available?

What Are Bad Credit Business Loans?

Bad Credit Business Loans will suit a business with a poor credit score or defaults. These loans can be creatively structured to benefit both the lending company and the business borrower.

To be honest, bad credit business lenders will almost certainly not be able to offer the absolute lowest rates or best terms and conditions on the market. As lending agencies take on a bigger risk by offering financing options to businesses with bad credit files (or low credit scores), they generally increase their rates to mitigate this risk.

However, there’s a huge difference between a lender offering a loan at 20% interest rate and an individual loan shark or payday type lender charging 100% to 200% interest.

Don’t Get Sucked Deeper Down the Debt Hole

Without thorough research, some desperate companies and small businesses sign up to bad credit business loans with horrendous interest rates that will leave them in more financial distress than before. While the initial influx of capital from the loan might provide some relief, high monthly payments and the interest burden can lead to long-term financial difficulties for businesses.

While bad credit business loans are usually offered to companies which have either defaulted on a previous loan or have some negative history on their credit file, these might be the only loan options for some start-up businesses unable to secure a loan through a traditional bank. Many banks have strict lending criteria that will exclude start-up ventures unable to provide the extensive documentation or proof of business profitability.

What to Look For in Bad Credit Business Loans

There are plenty of “shady” lenders on the Internet offering loans to small businesses with bad credit history. So, it’s absolutely essential you do your research.

While the lowest interest rate is one factor you should be looking for in the best bad credit business loans, you also need to be aware of the different hidden fees associated with these loans. Also be aware of potential penalties you could incur throughout the life of the loan.

In addition, you should ask your lender if they charge early payment penalties. As with any loan, the quicker you pay it off, the less you will end up paying in interest. If your business is gaining financial stability and you´re able to pay off your debt before the loan term ends, you shouldn´t be penalized for that. However, many lenders of bad credit business loans charge a ridiculously high prepayment penalty. This is unfair and damaging to your business.

Because there are so many different banks, other financial institutions, and lending agencies out there offering bad credit business loans, it can be intimidating to try to find the best lender offering the best rates, terms and conditions.

This online tool will help you quickly and efficiently search for the best lenders on the market. It will help you find the best bad credit business loans with guaranteed approval in Australia so that your company can get the financing it needs.

ebroker’s online tool uses AI to match potential borrowers to lenders across 30 data points. Think of it as a free, online live matching service for business owners looking for finance to help keep their business growing and moving forward.

ebroker Top 5 bad credit business lenders

Business Fuel

Business Fuel is an innovative product. A Cash Advance based on the strength and consistency of your business.


Shift is committed to delivering the right outcome for the business each time


Capify has pioneered unsecured alternative business finance in Australia since 2008.


Prospa is the finance company of choice for Australians for fast business loans.


Banjo, the complete cashflow management system that helps you take control and grow your business.

Alternative Sources of Business Finance

Many lenders are available in Australia to offer unsecured business loans to those businesses that may not be able to provide any security or assets to secure the loan. However, the risk associated with these types of loans is much higher for the lender, so they will have their own list of strict criteria to follow when you present a bad credit rating.

Even with a bad credit rating, you can still possibly access the business funding you need; however, bad credit business loans that come with guaranteed approval simply do not exist in Australia. If your business is performing well, then there is a chance that the lender may be able to look over your less than ideal credit history. But again, you will likely pay more for any bad credit business loan you procure.

Comparing Bad Credit Secured Loans

When comparing your bad credit loan options, consider the loan amount, loan term, interest rate, flexibility in payment plans, and how you will be using the funds. Bad credit business loans should only be applied for to cover legitimate needs for the business.

It is also recommended that you begin building your business credit back up so you can have access to better rates and loan offerings in the future. One of the best ways to rebuild your business credit is by making all of your payments on time every month.

Bad Credit Business Loan FAQ

Still have questions about bad credit business loans as you search for the best way to secure financing for your business? Read on to find out more.

What is the interest rate for a bad credit business loan?

If you are applying for a bad credit business loan in Australia, don't be surprised to see interest rate percentages of between 15 and 35%. The actual interest rate that will be applied to your loan, however, will depend on a number of additional factors, including the overall trading history of the business and its reputation.

Can I get a business loan with a bad credit score?

Simply put, yes. You can find a specialist lender that may be able to assist you in securing financing for your business even when you have a bad credit score. They will ask you questions about your business. They will consider several other factors on your loan application when deciding whether or not to extend you a bad credit business loan.

How can I repair my business credit history?

Applying for a short term and manageable loan is one way to repair your business credit history. It will show your level of commitment to repayment, and a lender will see this commitment and more likely consider you for a larger loan amount in the future.

What is a secured bad credit loan?

A secured bad credit loan can be taken out if you have an asset to offer as security for loan repayment. The interest rate for this kind of loan is also going to be much more competitive than the interest rates on unsecured loans. If you find you are ineligible for an unsecured loan, you may find that your approval chances for a secured loan are greater.

How do you get a secured loan with bad credit?

The typical process for getting a secured loan with bad credit involves researching what you can about different bad credit loan providers so you can then compare their fees and rates. You then have to establish that your credit history and income are within the requirements of the lender. Before submitting a loan application, be sure that you can make the payments on the loan.

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