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How to Get a Business Loan with Bad Credit?

Does your business need a financial lift, but your credit history is holding you back?

Max Funding is the answer you've been searching for – quick approval, no need for collateral, and funds transferred on the same day.

In a recent insight from Finder, securing a business loan with a bad credit score in Australia, defined as anything below 500, has become an uphill battle for many entrepreneurs.

Credit scores, those pesky numbers, are the bane of existence for small business owners.

They're the gatekeepers, deciding whether you can fuel your dreams or watch them wither.

Lenders rely on these scores to predict if you can pay back what you borrow, but if your score is in the danger zone, lenders slam the door shut.

And even if they don't, they often demand a hefty toll in the form of sky-high interest rates and fees.

It's a double whammy; not only is it harder to get a loan, but when you do, it feels like you're being penalised for struggling in the first place.

For small business owners, this financial Catch-22 stings.

Every rejected loan application echoes the frustration of late nights, hard work, and the sheer will to keep that dream alive.

With bad credit, the journey toward financial stability becomes a maze, and finding a way out is impossible.

The good news?

You can relax; we have the solutions that cater to you.

Case Study: Business Suffering Bad Debt

The Struggles of Evelyn Harper, Sustainable Fashion Maven

As she watched her credit score plummet, the once-welcoming banks and online lenders turned their backs on her, leaving her stranded on the precipice of financial ruin. 

It's a chilling tale of a passionate entrepreneur drowning in debt.

But what options remain for Evelyn? 

What's the way forward when the world has grown tired of her environmental dreams, leaving her with a tarnished credit history and dimming hope for Zenith Creations?

Evelyn Harper has always been a crusader for the environment. 

Her small business, Zenith Creations, was a sanctuary for all things sustainable – a realm of ethically sourced fabrics, handcrafted accessories, and dreams woven into threads. 

But then, her business came to a screeching halt as inflation and market conditions ravaged economies.

Evelyn's world shattered. Bills piled up, and her once-thriving business stood on the brink of extinction. 

Desperation led her down a dark path of bank loans, accumulating debts like stones in a sinking ship.

Almost A Quarter Of Australian Small Businesses Are Experiencing Financial Hardship

In April 2020, the Australian Bureau of Statistics (ABS) revealed that 74% of small businesses reported reduced cash flow. 

The financial woes continued to plague small businesses, as highlighted by the Australian Financial Complaints Authority (AFCA) recording 2,122 complaints from small businesses regarding financial hardship in the 2020–21 financial year, signifying a 10% increase from the previous year.

In tandem, the Australian Securities and Investments Commission (ASIC) reported a concerning figure of 5,515 company insolvencies during the same financial year, painting a grim picture of the economic challenges small enterprises face in Australia.

female business finance expert talking to customer
portrait of a female finance expert

In tandem, the Australian Securities and Investments Commission (ASIC) reported a concerning figure of 5,515 company insolvencies during the same financial year, painting a grim picture of the economic challenges small enterprises face in Australia.


These facts raise a common question for many small business owners: How do I get a business loan with a bad credit history?

Read on to find out.

What Is A Credit Score and Why Does It Matter?

When applying for a small business loan, it’s crucial to recognise that your personal credit score holds substantial weight in the eyes of lenders.

The evaluation of your loan application often revolves around your credit score.

It is a numerical representation determined by several critical factors, collectively called the 5 C’s of credit: character, capacity, capital, conditions, and collateral.

These aspects delve into your track record of debt repayment, the punctuality of your payments, and your debt-to-income ratio, among other considerations.

While various credit scoring models exist, Equifax, Experian, Illion and FICO are four of Australia's major credit reporting agencies.

Each of these agencies has its own scale for credit scores, and while they assess similar factors to determine your credit score, they might weigh these factors slightly differently.

Here's a breakdown of the Austrlian reporting agency credit score scales:

Awareness of these ranges is essential as they can significantly impact your ability to secure your business's funding.

So, your credit isn’t great – no big deal!

Getting the money you need for your business is still possible.

Credit Score Equifax Illion Experian FICO
Excellent Range 833 - 1,200 800 - 1,000 800 - 1,000 800 - 850
Very Good Range 726 - 832 700 - 799 700 - 799 740 - 799
Good Range 622 - 725 500 - 699 625 - 699 670 - 739
Average Range 510 - 621 300 - 499 550 - 624 580 - 669
Below Average Range 0 - 509 0 - 299 0 - 549 300 - 579

Your Next Steps If You Think You Have Bad Credit And Want A Business Loan

credit card

1. Figure Out Your Credit Score

Start by understanding your personal credit score. It's like a report card for grown-ups. Lenders check it to see if you're a good bet for lending money. Knowing your score helps you plan. If it’s not great, there's no need to worry. You can work on improving it before applying for a loan.
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2. Explore Your Options

Different loans have different rules. Some care about how long you’ve been in business, and others look at how much money you make. Research these rules for each type of loan you're thinking about. This part is like figuring out the instructions for a game. Consider various small business loans that might work for you despite your credit score.
easy lending

3. Pick the Best Fit

Once you know your options, choose what suits your business best. Don't rush. Read what other people say about the lenders and their services. Are people happy with them? Finding a lender with your back is essential, supporting you on your path to success. Don’t hesitate to ask for advice from experts like funding specialists. They can guide you in the right direction. Getting a loan might seem tricky, but you can make it happen with the right steps!

What Lenders Look at on a Bad Credit Loan Application

Getting a loan with bad credit isn't a lost cause. But do you wonder what lenders are peeking at when you ask for that much-needed cash?

Let's break it down for you!

1. Cash Flow

Your ability to handle your business's cash flow is a top concern for lenders. They want to know you can manage your finances effectively to make those loan payments. Demonstrating that your business generates enough income to meet these obligations can significantly boost your chances of loan approval.
business-performance-and-cash-flow-analysis
staff meeting

2. Business Plan

Some lenders may request a peek at your business plan. Your plan can reveal unique aspects of your business, including value propositions, marketing strategies, the leadership team, and revenue and profit models. A well-crafted business plan should concisely explain your funding needs and the reasons behind them.

3. Current Debt Obligation

If you're already juggling a business loan, obtaining another one may pose challenges, especially if the initial lender placed a lien on your business. Taking on more debt than your business can reasonably manage can impact your business's health and credit score.
Two people are shaking hands over a desk, with documents, a calculator, and a pen organized neatly on top. One person is wearing a suit and tie, while the other person's hand is visible. The scene appears professional, suggesting a business agreement.
man-with-adviser-calculating-mortgage-rate

4. Your Business History

Lenders are curious about how long your business has been around. They figure the longer, the better. A study by the Small Business Administration shows that businesses over a year old have a better chance of getting loans.

5. How Much Money You Make

This part is crucial! Lenders need to know you're making enough dough to pay them back. They usually look at your annual revenue to decide if you can handle a loan.
excited-young-woman-received-bank-loan-approval-notice
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6. Your Plan and Purpose

Ever played chess?

Your move should be thought out. Lenders want to know why you need the money and how you'll use it for your business. You're more likely to score that loan if you've got a solid plan.

7. Your Purpose for the Loan

Why do you need the money?

Having a clear plan, whether it's for expanding your business, purchasing equipment, or hiring staff, helps lenders understand that you're making strategic moves for your business's growth. A well-thought-out purpose increases your chances of approval.
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coffee-shop-owners

8. Your Collateral (If Any)

Collateral is like a safety net for lenders. It’s something valuable you offer as a backup in case you can’t repay the loan. It gives them a sense of security, making them more willing to lend, even if your credit isn’t perfect.

9. Your Personal Financial History

Lenders might peek into your personal finances too. They want to know if you're financially responsible in your personal life. This includes things like your personal credit card usage and mortgage payments.
loan-officer-explains-loan-application-to-customer
people-sitting-at-the-table

10. Your Industry and Market Conditions

Believe it or not, the type of business you're in and the current market trends matter. Some industries are riskier for lenders, especially during economic downturns. If your business operates in a stable industry, lenders might view your application more favourably.

How to Improve Your Credit Score for a Better Business Loan in the Future?

Building strong credit is the key to securing a brighter financial future for your business. 

Your business's credit health can open doors to better loan options and help you achieve your entrepreneurial dreams.

Let's talk about some practical strategies to help you qualify for a loan and secure better terms next time you're borrowing.

Let's break it down for you!

1. Polish Your Personal Credit

Your personal credit score isn't just a number; it's your business's best friend.

To make it shine, here's what you can do:

  • Always pay on time; it's like homework but for your bills!
  • Keep your credit card balances under control, ideally below 30% of your total limit.
  • Avoid opening too many new credit lines at once; it's like trying to juggle too many balls.
  • Keep a sharp eye on your credit report and dispute any fishy stuff you see.

2. Cultivate Business Credit

Your business needs its own credit identity.

Start by incorporating your business, getting a tax ID, and opening a business bank account.

Once that's done, hunt for those business lines of credit.

Even if you can't snag a loan, a business line of credit can be your sidekick.

Just like personal credit, keep your business credit healthy, too.

3. Rethink Your Business Plan

Sometimes, you must trim the fat.

Reassess your business plan and figure out where you can cut costs.

Think smart – use social media for marketing and build your website.

Saving money means you can ask for a smaller loan amount, increasing your chances of approval.

4. Prove You're Trustworthy

Gather a team of experienced partners; it's like having a superhero squad.

Lenders often look at personal income and assets, so surround yourself with financially stable people.

Collect reference letters from current creditors and vendors.

It's like having your teachers vouch for you, but in the business world.

5. Think Outside the Box

Be creative! If you can't get the full amount you need, don't fret.

After your first loan, your improved credit score can open new doors.

Stay persistent, and you might qualify for bigger and better loans.

Remember, it's not just about getting a loan; it's about getting the right one for your business dreams.

Why Choose Max Funding For Your Bad Credit Business Loan?

Running a business with a less-than-perfect credit score can be challenging, but don't let it deter your entrepreneurial spirit.

If you need a financial boost to propel your business forward, bad credit business loans can be your lifeline.

But where do you find these elusive opportunities, especially those hassle-free and supportive of your business goals?

Look no further; we've found your solution.

Max Funding—your trusted partner in financial solutions

Max Funding stands out as a reliable and understanding partner in bad credit business loans.

What sets us apart is our commitment to making the loan process seamless, stress-free, and tailored to your needs.

credit score

1. No Credit Checks, No Collateral

Max Funding understands that your past credit struggles shouldn't hinder your business's progress. 

With no credit checks and no need for collateral, they focus on your business's potential and future rather than dwelling on the past.

 

2. Low Interest Rates Per Month

As per Money.com.au, the go-to hub for personal loan comparisons, the jaw-dropping reality of average interest rates for loans with bad credit (ranging from 0 to 459 credit score) in 2023 will leave you wide-eyed: a staggering 25.25% per annum! 

Yes, you read it right – a rate that seems to defy gravity and reason. 

These figures, based on genuine quotes offered to borrowers, paint a daunting picture of the financial challenges faced by those with less-than-ideal credit scores. 

It's not just a number; it's an exorbitant mountain many have to climb, emphasising the uphill battle for borrowers in the realm of bad credit loans. 

Max Funding believes in fair and affordable solutions which is why we start ours from 1.25% per month. 

Our bad credit business loans feature low-interest rates, ensuring your business can thrive without drowning in debt.

3. Easy Application Process and Lightning-Fast Approval

Time is of the essence in the business world. Max Funding's application process is designed for efficiency. 

It takes minutes to apply, and our fast approval system ensures you get the green light within minutes, not days.

An icon of a clipboard with a piece of paper attached. The paper displays a simplified image of a person, accompanied by lines of text indicating information, suggesting a document, profile, or resume.

Step 1

Fill out our online pre-approval form - it'll take only a few minutes to complete.

An icon of two overlapping sheets of paper, with grey outlines and light blue accents. The front sheet has three horizontal lines, suggesting text, while the back sheet peeks out from behind, indicating duplication or document-related functions.

Step 2

Upload a few documents from your mobile or computer - make sure they are legible.

stack of money

Step 3

Sign the contract, sit back and wait for the money to be deposited into your account, once we have done our final checks.

4. Same Day Fund Transfer

Your business can't afford to wait, and with Max Funding, you won't have to. 

Once approved, the funds are transferred on the same day, providing immediate access to your needed resources.

5. Get Free Help From A Personal Financial Advisor

Max Funding goes the extra mile by offering a dedicated financial advisor. 

This expert will guide you through your financial engagements, ensuring you make the best decisions for your business's growth and stability.

In the world of bad credit business loans, Max Funding emerges as your dependable ally, ready to support your business aspirations and fuel your journey to success. 

Don't let bad credit hold you back; let Max Funding pave the way for your business's financial resurgence.

credit-counselling-for-student-loan

Compare Max Funding Bad Credit Business Loans With The Rest

Are you tired of endlessly searching the internet for the best business loan options in Australia, only to end up overwhelmed and without clear answers?

We understand the frustration.

With many banks and online lenders offering various terms and conditions, finding the right fit for your business needs can be daunting.

To simplify your search and decision-making process, we've compiled a comprehensive comparison of some of the top lenders in the country.

This handy guide outlines key factors such as approval time, interest rates, collateral requirements, etc.

Dive in to make an informed choice for your business's financial future.

Lender Approval Interest Rates Collateral Required Credit Check Loan Terms Repayment
Max Funding 24 hours Negotiate Maxfunding Not required No credit check 5 years Flexible
Commonwealth Bank 2 weeks From 5% p.a. Often required Strict criteria 5 years Monthly
ANZ 2 weeks From 5.5% p.a. Often required Strict criteria 5 years Monthly
Westpac 2 weeks From 6% p.a. Often required Strict criteria 5 years Monthly
NAB 2 weeks From 5.5% p.a. Often required Strict criteria 5 years Monthly
Prospa 48 hours From 9% p.a. Sometimes required Lenient criteria 2 years Weekly
Moula 48 hours From 8.5% p.a. Sometimes required Lenient criteria 2 years Weekly
OnDeck 48 hours From 10% p.a. Sometimes required Lenient criteria 2 yearhs Weekly
Capify 48 hours From 9.5% p.a. Sometimes required Lenient criteria 1 year Daily
*The rates listed are for educational purposes and are based on research conducted on the 18th October 2023. These rates may have changed, Max Funding recommend you conduct your own research for the current rates.

The Credibility of Max Funding: Why Trust Our Services?

When you think of a financial partner for your business, what comes to mind?
equity

Reliable Support for Australian Businesses

It could be reliability, a vast reach, or personalised service. Max Funding embodies all these qualities and more.

With a staggering $142,546,168 in funding requests, we’ve been the backbone for over 8,596 Australian businesses, spanning 131 diverse industries.

It's not just about the numbers; it's about the commitment. Our reliability shines through our consistent support and dedication to helping businesses thrive in a competitive landscape.
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Personalised Financial Guidance

When you join the Max Funding family, you're not just another application. You're paired with a dedicated financial advisor who's there for you from the first inquiry to the settlement process and even beyond.

You'll have direct access to them, ensuring consistent and personalised communication.

We understand that each business is unique, and our tailored approach reflects this understanding, providing the support and guidance necessary for your specific needs.
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Community Commitment and Recognition

But Max Funding's dedication doesn't stop at businesses. Our heart is in the right place, quite literally.

We support significant causes like the National Breast Cancer Foundation and the Heart Foundation, emphasizing our commitment to the broader community.

And our excellence hasn't gone unnoticed. Leading publications like The Sydney Morning Herald and The Australian Financial Review have recognized our contributions. So, if you're looking for a partner that combines professionalism with a personal touch and a dash of heart, Max Funding is the name to trust.

Business Loans Up To $350,000

Apply in 3 Minutes (Obligation Free)

Bad credit? OK! New business? OK!
3 Minutes Application An alternative to banks

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