Can you get a business loan with bad credit?

Businesses often require a financial investment to help get them up and running. But before granting a loan, most lenders will review your credit score. A good credit score is ideal, but it isn't always the case. Fortunately, it’s not the only path to funding. Here's what you need to know if you're worried about how bad credit will impact your ability to get a business loan.

What’s a bad credit score in Australia?

In Australia, a bad credit score typically falls below 500 on most credit reporting scales, which usually range from 0 to 1,000 or 1,200, depending on the credit bureau.

A score in this range suggests to lenders that you may have a history of missed payments, defaults, or other credit issues, making you a higher-risk borrower.

Each of Australia’s three main credit bureaus defines low credit scores differently. Here’s how they compare:

Getting a business loan with bad credit

When applying for a loan or credit card, lenders use your credit score to assess the risk of lending you money. When it comes to small businesses, they may check both your personal and business credit scores. If you’re just starting out and don’t have a business credit score yet, your personal score will carry more weight. A low credit score can make it harder to get approved, and in some cases, your application might be declined.

Rather than risking having an application denied - which can hurt your credit score - take the time to improve your score before applying. Lenders want to see that you’re financially responsible, and even small changes can make a big difference over time. Here are a few effective ways to boost your credit score:

• Pay your bills on time, as payment history is a big factor in your credit score.

• Maintain your credit card usage at less than 30% of your total credit limit to show lenders that you’re not overextended.

• Avoid unnecessary credit card applications because every hard inquiry can lower your score.

• Review your credit report frequently to spot mistakes, and dispute any incorrect information you find.

• Keep older accounts open because a longer credit history strengthens your score by showing consistent, responsible credit use over time.

How much can you borrow with poor credit?

In Australia, bad credit business loans can range from $5,000 up to $1 million, depending on your business’s financial health, revenue stability, and ability to meet repayments. However, most small businesses with a poor credit history typically qualify for loans between $5,000 to $300,000.

The specific loan amount you're eligible for is influenced by several factors, including:

• Your business’s cash flow

• Time in operation

• Monthly turnover

• Credit risk profile

Because bad credit represents a higher risk to lenders, interest rates tend to be steeper, typically 15% to 35% per annum. Some lenders may also require security or personal guarantees, especially for larger loan amounts. Unsecured options are available, provided the business meets basic revenue criteria.

How to qualify for a business loan with bad credit 

Your credit score isn’t the only factor lenders consider when approving a business loan. Lenders will closely review your business’s cash flow, bank statements, and overall financial health to assess your ability to repay the loan.

To apply for a business loan, you’ll typically need to provide:

• A valid ABN

• Proof of GST registration (if applicable)

• Business bank statements

• Financial documents

• Identification for the business owner

Some lenders also offer no-credit-check business loans, particularly for smaller amounts (usually up to $150,000), based primarily on your business’s income and trading history.

These loans can be used for working capital, equipment purchases, or other urgent needs, and they offer immediate access to the assets you buy. With consistent repayments, they can even serve as a tool to rebuild your credit rating and open the door to more competitive financing options in the future.

They’re especially helpful for businesses recovering from credit events like bankruptcy or defaults, providing a second chance at securing much-needed funding. However the fees and interest rates can be even higher, so tread carefully.

Improve your credit score to qualify for better business loans

While bad credit business loans can provide essential funding when you need it most, they’re often a temporary solution. Ultimately, the goal should be to improve your credit score so your business can qualify for more competitive finance options in the future.

By consistently making repayments on time and managing your debt responsibly, you can gradually rebuild your credit profile. Over time, this opens the door to:

• Lower interest rates

• Longer repayment terms

• Larger loan amounts

• Access to mainstream lenders and banks

Using a bad credit loan wisely can be a stepping stone, not just to support your business now, but to strengthen your financial position for long-term growth.

See Also: Personal Loan Calculator

Read more: Business Basics

Bea Garcia

Finance Journalist

Bea is a journalist with a focus on finance and lifestyle. Currently writing for the InfoChoice Group, she brings her experience working with established media organisations in helping Australians make smarter, more confident financial decisions through accessible content. She previously worked as a content specialist, focusing on workplace culture and business resilience.

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