Why Banks Say No (And What to Do Instead)
Banks use personal credit score as a proxy for default risk. Below 640 FICO, the math doesn't work for them at the interest rates they're legally willing to charge. They aren't judging your business — they're following a formula.
Revenue-based lenders use a completely different model: they look at actual business deposits, not credit predictions. If your business generates consistent revenue, the risk model is fundamentally different — and the approval threshold is much lower.
Credit Score Requirements by Product
| Funding Type | Min FICO | Funding Speed | Collateral | Bank Turndowns OK? |
|---|---|---|---|---|
| MCA (Merchant Cash Advance) | 500 | 1–3 days | None | ✓ Yes |
| Invoice Factoring | None* | 1–5 days | Invoices | ✓ Yes |
| Equipment Financing | 580–600 | 3–7 days | Equipment only | Sometimes |
| SBA Loan | 640–680 | 30–90 days | Often required | ✗ No |
| Bank Business Loan | 680+ | 30–60 days | Usually required | ✗ No |
*Invoice factoring based on your customers' credit, not your own. Best for B2B businesses with 30-90 day payment terms.
MCA Requirements When Credit Is Below 640
If you have bad credit but consistent revenue, a merchant cash advance is likely your fastest path to capital. Here's what you need:
Check If You Qualify — 5 Minutes
500 FICO minimum. Soft pull — no credit impact. All 50 states.
Bank turndowns OK. Tax liens OK. Prior bankruptcy (discharged) OK.
Frequently Asked Questions
Can I get a business loan with bad credit?
Yes — with the right product. Banks require 640-680+ FICO. Merchant cash advances approve at 500 FICO based primarily on monthly deposits. Bank turndowns, tax liens, and discharged bankruptcies do not disqualify.
What is the minimum credit score for a business loan?
SBA: 640-680+. Banks: 680+. Merchant cash advances: 500. Invoice factoring: no minimum (based on your customers' credit). The right product depends on your business profile, not just your score.
What disqualifies you from a bad credit business loan?
For MCA: FICO below 500, less than 6 months in business, under $4,000/month in deposits, or active (not discharged) bankruptcy. Tax liens, judgments, collections, and prior bank turndowns are NOT disqualifiers for MCA.
Does applying for a bad credit business loan hurt my credit?
MCA applications use a soft pull — no impact on your credit score. Bank and SBA applications use hard pulls, which temporarily lower your score 5-10 points. Apply for MCA before applying to banks to preserve your score.
What are the best options for bad credit business funding?
1. MCA: 500 FICO, revenue-based, 1-3 days — best for $5,000+/month deposit businesses. 2. Invoice factoring: no FICO minimum, based on customer creditworthiness — best for B2B businesses with outstanding invoices. Banks and SBA are generally not viable below 640 FICO.