Bad-credit business loan rates in 2026 depend heavily on FICO band and collateral. 640-679: 15-25% APR on online term loans. 580-639: short-term loans at 30-50% effective APR, or equipment financing at 16-22%. Below 580: mostly merchant cash advances at 1.30-1.50 factor (40-100%+ effective APR), invoice factoring, or secured options. The biggest levers are collateral and bank-statement strength — both can move you a tier regardless of score.
A low credit score doesn't close every door — it narrows which products you qualify for and raises the price. The good news is that most bad-credit business financing is underwritten on revenue and bank statements rather than FICO alone, so a strong, consistent deposit history can offset a weak score. This page is a reference: 2026 rate ranges by FICO band, which products stay available at each tier, and the moves that lower your cost. For the evergreen guide, see business loans for bad credit; for the full rate picture, see the 2026 business loan rates hub.
2026 Bad-Credit Rates by FICO Band
| FICO Band | Likely Products | Rate / Cost (2026) |
|---|---|---|
| 640-679 | Online term loan, equipment, LOC | 15-25% APR |
| 580-639 | Short-term loan, equipment financing | Short-term 30-50% APR; equipment 16-22% |
| 500-579 | MCA, invoice factoring, secured | MCA 1.30-1.50 factor (40-100%+ APR) |
| Below 500 | Secured / collateral-backed only | Case-by-case; strong revenue required |
Ranges assume 6+ months in business and steady revenue. Confirm your tier in credit score requirements for working capital, and see equipment financing with bad credit for the collateral route.
Which Products Stay Available With Bad Credit
- Equipment financing — the asset secures the loan, so credit matters less. Often the cheapest bad-credit option at 16-22%. See equipment financing rates 2026.
- Invoice factoring — priced on your customers' credit, not yours. A fit if slow receivables are the real problem. See invoice factoring rates.
- Short-term loans — faster and looser than bank loans, at 30-50% effective APR.
- Merchant cash advance — the most accessible and the most expensive; convert the factor rate before signing. See MCA rates 2026.
What Actually Drives Your Rate
- Bank-statement strength — for bad-credit products this outweighs FICO. Deposit consistency and negative days matter most.
- Collateral — securing the loan can cut hundreds of basis points and open denied products.
- Time in business — 2+ years widens options even with a low score.
- Existing advances — stacked positions raise rate and trigger declines.
- Industry and revenue trend — growing, stable revenue earns better pricing than a declining trend at the same score.
How to Lower the Cost
- Clean up 90 days of statements before applying — steady deposits, no overdrafts.
- Offer collateral if you have equipment, receivables, or real estate.
- Right-size the product — don't fund a long-term need with a short-term advance.
- Avoid stacking — one facility, repaid cleanly, builds the track record that earns a refinance.
- Refinance after 6-12 clean months into a cheaper product as your score and history improve. See how to get out of bad business debt.
Next Step
Get matched with lenders that underwrite on revenue, not just credit — and see every option you qualify for in one application. Get matched with lenders.
A worked example: what bad credit really costs
Put numbers on it. A business with a 650 FICO borrowing $50,000 on a one-year online term loan at, say, a 1.25 cost factor repays about $62,500 — $12,500 in cost. The same business with a 700 FICO might land closer to a 1.15 factor and repay $57,500, saving $5,000 on the identical loan. That gap is why cleaning up ninety days of bank statements before applying — steady deposits, no overdrafts — and offering collateral or a larger down payment pays off directly: with bad-credit products, bank-statement strength often outweighs the FICO score itself.
Frequently Asked Questions
Can I get a business loan with bad credit?
Yes. Equipment financing, invoice factoring, merchant cash advances, and revenue-based online term loans all stay available below 680, because they lean on collateral or revenue rather than credit alone — at a higher cost.
What is the interest rate on a bad-credit business loan?
It varies widely by product and FICO band, but expect meaningfully higher pricing than prime borrowers — often quoted as a factor rate rather than an APR on short-term products. Stronger bank statements lower it.
What lowers the rate on a bad-credit loan?
Clean bank statements over the last 90 days, collateral or a larger down payment, more time in business, and choosing an asset-secured product like equipment financing where the collateral does the work.
Does my FICO or my revenue matter more for a bad-credit loan?
For bad-credit products, bank-statement strength and consistent revenue usually outweigh the FICO score. Lenders that underwrite on cash flow can approve borrowers a credit-only model would decline.
Frequently Asked Questions
What are business loan rates for bad credit in 2026?
With a 640-679 FICO, expect 15-25% APR on online term loans. At 580-639, most options are short-term loans at 30-50% effective APR or equipment financing at 16-22%. Below 580, you are largely limited to merchant cash advances at 1.30-1.50 factor rates (40-100%+ effective APR) or secured options.
Can you get a business loan with a 500 credit score?
Yes, but options narrow sharply. With a 500-579 score and strong, consistent revenue, you can usually still qualify for a merchant cash advance, invoice factoring, or secured equipment financing. Unsecured bank and SBA loans are generally off the table until you rebuild credit.
Does collateral lower the rate when you have bad credit?
Significantly. Securing the loan with equipment, receivables, or real estate can cut the rate by hundreds of basis points and open products that unsecured underwriting would deny. Equipment financing in particular weighs the asset heavily, so strong collateral can offset a weak score.
What matters more than credit score for bad-credit approval?
Bank-statement strength. For most bad-credit products, consistent monthly deposits, few negative days, and time in business drive approval and rate more than the FICO itself. Three clean months of statements can move you to a better tier.
How can you lower a bad-credit business loan rate over time?
Pay every obligation on time, lower revolving utilization, avoid stacking multiple advances, and build a repayment track record on a smaller facility. After 6-12 months of clean performance, many borrowers refinance into a materially cheaper product.