Can you get a business loan with bad credit?

Written by Kaz · Published 27 September 2026 · How figures are checked

Summary

Sometimes, yes. The rule for SBA-backed loans lets a lender weigh credit history alongside cash flow and collateral, so a low score does not end the application by itself. What it changes is the price and the security: SBA says plainly that "lenders use credit scores to determine credit risk and interest rates," and many lenders ask for a pledged asset on top. Outside the SBA programs there is no published minimum score; each lender sets its own.

What an SBA lender is allowed to weigh

13 CFR 120.150 opens with a hard requirement: the applicant "must be creditworthy," and the loan must be sound enough "to reasonably assure repayment." Then it lists what lenders "may consider (as applicable)": the credit score or credit history of the applicant, its associates, and any guarantors; the earnings or cash flow of the business; and, where applicable, equity or collateral.

Two things in that wording matter for a weak file. "May consider" is permissive, so a lender can let steady cash flow or a pledged asset carry a score that would fail on its own, and the Lender Match page says the agency "helps guarantee some loans that otherwise may not qualify." Guarantors are on the list, so the owner who signs a personal guarantee has their personal credit file read alongside the business's.

There is no universal cutoff

The Federal Reserve's Small Business Credit Survey calls a personal score under 620, or a business score of 1 to 49, "high credit risk." That is a label for grouping survey answers, not a lending rule. No lender is bound by it, and Lender Match tells borrowers to ask each lender about its "minimum credit score, cash flow requirements, and other qualifying factors," so the same file can get different answers from different lenders.

When collateral is short

On 7(a) small loans, which are term loans of $350,000 or less, SBA does not require collateral on loans of $50,000 or less, except international trade loans, and a loan is not to be declined solely because collateral is inadequate. Above $50,000 the lender applies the written collateral policy it uses for its own commercial loans, which for a small business usually means a home, a vehicle, inventory, or other property, as Lender Match describes. Because the rule's offsets to a weak score are cash flow and collateral, a business with neither has nothing left to show, and that combination is the one most likely to end in a refusal.

Two rights after a no

If a lender turns you down, the Equal Credit Opportunity Act lets you ask for the reasons. The FTC's guide says to send a written request within 60 days of the denial, and the creditor must give the specific reasons in writing within 30 days. The written reasons tell you whether the problem was the score, the cash flow, or the collateral, which is the difference between fixing a credit report and looking for a different lender.

If the reason points to errors on the owner's personal credit report, the CFPB describes the dispute route. You write to Experian, Equifax, or TransUnion explaining what is wrong and why, with copies of supporting documents. The company that furnished the data generally has 30 days to investigate, and if it was wrong it must fix or remove it and tell every bureau.

Pricing has a ceiling on SBA loans only

A weaker file usually means a higher rate, but on a 7(a) loan the lender's spread over the base rate is capped by loan size. Our SBA rate cap page has the four tiers. A loan without the SBA guarantee carries no such federal cap, so the price is the second thing to compare once an approval is in hand.