Guide · The best options, compared
What are the best business funding options with bad credit in 2026?
By Alex Makowski Published
With a score under 600, the cheapest money is usually a microloan or a CDFI loan, at roughly 8 to 13 percent, if you can wait several weeks and need $50,000 or less. Equipment financing is next when you are buying an asset. Working capital loans and merchant cash advances fund in days on your deposits, and they cost the most.
In this guide
- 01Who made this list, and how it is ordered
- 02The five options, cheapest first
- 03What $30,000 costs on four of them
- 04How often owners with weak credit get what they ask for
- 05Which one to choose
- 06What to walk away from at any score
- Won't affect your credit
- Free, no obligation
- Up to $500K
01
Who made this list, and how it is ordered
Business Loans for America wrote this list, and it is a broker: the funders in its network pay it when a business it placed is funded. It places equipment financing, working capital loans and merchant cash advances, three of the five options below. It does not place microloans, CDFI loans or invoice factoring, and the cheapest option on the list is one of those.
The list compares kinds of funding, not named lenders. We have no first-hand data on another company's approvals or prices, and a broker ranking the lenders it sells to is an advertisement.
- Included: options an owner with a personal score under 600 can realistically get. Bank and SBA 7(a) loans, where most lenders look for 650 or better, are not.
- Order: typical cost per year, cheapest first. Where two ranges overlap, the note under the table says so.
- Checked: October 15, 2026, against the sources at the foot of this page. The date under the headline changes when the page does.
02
The five options, cheapest first
Each row is a kind of funding, with the job it suits and what it usually takes. The first three are cheaper and slower, or only fit one kind of business. The last two are the fast ones, and the price reflects it.
| Option | Do we place it? | Best for | Credit it usually needs | Typical cost | Amount | Money arrives |
|---|---|---|---|---|---|---|
| Microloan or CDFI loan | No | A modest amount you can wait several weeks for | No national minimum; each nonprofit lender makes its own decision | SBA microloans generally 8 to 13 percent a year | Up to $50,000 on an SBA microloan; the average is about $13,000 | Usually weeks |
| Equipment financing | Yes | A truck, machine or other asset that holds its value | Around 600; specialist programs reach into the 500s with a larger down payment | High teens to twenties a year with a score in the 500s | The equipment's price, less a down payment of 10 to 20 percent or more | Two to five business days from a signed quote |
| Invoice factoring | No | A business whose customers are other businesses that pay in 30 to 60 days | Your customers' credit counts for more than yours | 1 to 5 percent of each invoice, roughly 12 to 60 percent a year if customers pay in 30 days | Most of each invoice, as you raise it | A day or two per invoice, once the account is set up |
| Working capital loan | Yes | One amount for payroll, stock or a bill that is due now | Deposits count for more than the score; owners in the 500s are funded every day | Interest commonly in the twenties to fifties a year, or a fixed factor | Half to one and a half times a month's deposits | One to three business days |
| Merchant cash advance | Yes | The fastest yes when the score is what stopped the others | Some providers set no minimum; others look for about 500 | A factor of 1.1 to 1.5, toward the top with weak credit | Roughly half to one and a half times a month's deposits | One to three business days |
03
What $30,000 costs on four of them
Take $30,000 for a business whose owner has a score in the 500s, priced in the upper half of each range, because that is where a weak file usually lands. Factoring is left out because it advances against invoices as you raise them rather than lending a fixed sum.
Read the total and the payment together. The working capital loan has the smallest total because it is repaid in nine months. The microloan has the smallest payment and the lowest price per year. The advance has a large total and by far the largest payment: about $7,100 to $7,900 over a 22-day month, against $610 to $680 a month for the microloan.
| Option | Assumed price | Term | Total cost | Payment |
|---|---|---|---|---|
| Microloan or CDFI loan | 8 to 13 percent a year | Five years | About $6,500 to $11,000 | About $610 to $680 a month |
| Equipment financing | 18 to 24 percent a year | Four years | About $12,300 to $16,900 | About $880 to $980 a month |
| Working capital loan | 35 to 50 percent a year, repaid weekly | Nine months | About $4,200 to $6,100 | About $880 to $930 a week |
| Merchant cash advance | A factor of 1.35 to 1.50 | About six months | $10,500 to $15,000 | About $320 to $360 every business day |
04
How often owners with weak credit get what they ask for
In the Federal Reserve Banks' 2025 Small Business Credit Survey, 30 percent of high-credit-risk employer firms that applied for a loan, a line of credit or a merchant cash advance were approved for the full amount they sought. Among low-risk firms it was 60 percent. The survey counts a firm as high risk when the score it used to get financing was a personal score under 620, or the business-score equivalent.
Two cautions. The survey is not a random sample, and the scores are self-reported. And it counts approvals, not prices: the same survey found that 60 percent of firms that borrowed from an online lender said the cost was higher than they expected, against 37 percent at small banks and 32 percent at large banks.
The practical reading: with weak credit, expect to be offered less than you asked for and to pay more than you hoped. Decide before you apply what amount, and what total repaid in dollars, still works for the business.
05
Which one to choose
Whatever you choose, what improves the next offer is time and steady deposits. Another three months of clean statements moves a price more than a twenty-point score improvement, and our guide to funding with a 580 score shows what opens at each band.
- You can wait a month and need under $50,000: start with a microloan or a CDFI. SBA lists its microloan intermediaries, and the Treasury's CDFI Fund certifies community lenders.
- You are buying equipment: finance the equipment. A machine paid for out of an advance costs short-term prices for a long-lived asset.
- Your customers are businesses that pay slowly: factoring those invoices, or a broker's quick pay if you haul freight, can cost less than borrowing against your deposits.
- You need a set amount this week: a working capital loan first, and an advance if that is the only yes. Compare offers on the total repaid in dollars.
- Your score is 600 or close to it: ask about a line of credit as well. It is the cheapest way to cover a gap that comes back, and it is the product where a few points make the difference.
06
What to walk away from at any score
Business Loans for America charges business owners nothing; it is paid by the funders in its network. Applying through it does not affect your credit score. A hard pull happens only if you accept an offer from a funder that requires one, and you are told before it happens.
- An upfront fee to secure approval or release funds. It is the mark of an advance-fee scam, and no legitimate funder or broker charges one.
- Approval guaranteed before anyone has read your bank statements.
- A second advance stacked on one you already have, presented as a fresh start.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- What is the easiest business funding to get with bad credit?
- A merchant cash advance. Some providers set no minimum score because they underwrite on bank deposits, so a steady business with an owner in the 500s is approved routinely. It is also the most expensive option on this list: the easiest, not the best.
- Can I get an SBA loan with a credit score under 600?
- A 7(a) loan through a bank is unlikely, because most SBA lenders look for 650 or better. A microloan is different: SBA's microloan page sets no minimum score, and each nonprofit intermediary makes its own credit decision, so a lower score is not an automatic no.
- Will shopping for funding lower my score further?
- It can if each lender runs its own hard pull. Applying through Business Loans for America does not affect your score; applying to several lenders separately can mean several hard pulls and several requests for the same documents.
Guides
More on the best options, compared
For restaurants
Six kinds of restaurant funding, cheapest first, matched to the walk-in, the slow season and the second location.
For trucking
Truck financing, quick pay, factoring and working capital: which one for the truck, the slow broker, the rebuild.
For construction
Draw gaps, retainage, materials up front and the machines: what each should be funded with.
The fastest options
Nine ways to get money, by how soon it actually lands, and the days left in 2026 when it will not move.
Sources
- U.S. Small Business Administration — MicroloansSmall loans the SBA funds through nonprofit, community-based intermediary lenders. An option we do not place.
- U.S. Treasury CDFI Fund — CDFI CertificationWhat makes a lender a certified Community Development Financial Institution, from the Treasury office that certifies them.
- Federal Reserve Banks — 2026 Report on Employer Firms (2025 Small Business Credit Survey)Which small employer firms applied for financing in the prior 12 months, where they applied, how much of it they got, and how the cost compared with what they expected.
- FRED — Small Business Credit Survey: Approved for New Financing, High Credit Risk Employer FirmsThe share of high-credit-risk applicants approved for the full amount they sought, by survey year: 30 percent in the 2025 survey.
- FTC — Report FraudWhere to report advance-fee and business-funding scams.
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