Bad Credit? Where to Find Small-Business Loans

Credit score enables lenders like banks and non-banking financial institutes to gauge the amount of risk involved in lending a borrower money. So, a good credit score translates into less risk involved. Therefore, borrowers with good credit scores are more likely to receive funding.

Your credit score can range anywhere from 300 to 900, a score of 750+ is considered to be a good score. Some lenders also consider individuals with a credit score of 700+ however, they are less likely to automatically qualify. Anything below 700 is considered a poor score.

If you are a business owner with a poor credit score, banks are much likely to reject your small business loan application. Banks opine that borrowers with low credit score are at higher probability of turning into loan defaulters. However, the following options are available to borrowers with weak credit history –


1.Credit Card – If you are a business owner with less than 3 years of business vintage opt for a credit card. Financial institutes are less likely to consider your credit score while offering credit card facility. And your credit card limit is decided on your income potential and other non-income sources. Indian NBFCs like Bajaj Finserv are coming up with Supercards designed to meet your cash needs. Bajaj Finserv RBL Bank Supercard is powered by a unique feature that allows you to convert your credit limit into a personal loan and get instant cash for up to 90 days.

2. Approach alternate lenders – While banks look for a 750+ credit score, alternative lenders are open to funding individuals with a credit score of 500 to 650+. Moreover, a few lenders do not have any minimum credit score criteria. NBFCs are now emerging as a highly feasible funding option for small businesses. Bajaj Finserv, an Indian NBFC is offering Business Loans with flexi tenor facility enabling you to borrow as per your needs and repay the fund according to cash availability.

3. Seek short-term funding options – Most NBFCs focus on your operating history and business profitability instead of your credit score while lending. Hence, they are open to providing short-term loans for businesspersons with average or poor credit score. Working Capital Loan is an example of short-term funding options offered by NBFCs. These are unsecured loans and so are devoid of any additional hassle of arranging personal guarantee or pledging any asset as collateral.

small business

4. Unpaid accounts receivables – If you have pending account receivable or bills receivable, encourage your debtors to pay up. This would serve as a source of capital for your business as well as improve your credit score. You can also adopt Bill Discounting by trading a bill or invoice before it is due for payment at a lesser price than its face value. You also have the option of Bill Factoring where you trade your entire debt book or debtors at a discount.

5. Add a Co-applicant – Business people can improve their chances of loan approval by including a co-applicant to the application. Adding a creditworthy co-applicant provides added assurance to your lending body, by reducing the risk involved in lending to your business.

Do not let a bad credit score keep you from achieving your business goals. Seek out for alternate lenders focusing more on your annual revenue, business vintage and future potential than your credit score.

Author Bio:

Nidhi Mahajan is a guest blogger and passionate about content writing. She has been

creating SEO friendly content for more than 5 years. For more info you can check her articles at