getting working capital loans with bad credit

Can I Get Working Capital Loans With Bad Credit?

Are you a small business owner, with a less than stellar credit score, in need of a working capital loan?

Bad credit can seriously hinder your chances of getting a loan, but the growth in the online lending industry has opened up a world of opportunities that weren’t available a decade ago.

Read on to learn how you can get a loan even if you have bad credit.

What is a Working Capital Loan?

A working capital loan is a loan used by companies or small businesses to fund daily operations or increase their cash flow. These loans could be used to make payroll, pay rent or the mortgage, or any other daily expenses the business incurs.

Because the loans are meant to meet immediate needs and infuse your business with the cash needed right away, they’re not meant to fund long-term investments and need to be paid back in a short timeframe. Keep that in mind as you’re exploring your financing options.

What Are My Options?

There are a lot of options for working capital loans, including online lenders and traditional brick-and-mortar banks and credit unions. However, in the case of bad credit, you have to be a bit more intentional in your search, seeking out funding sources that may be willing to overlook your credit score.

Some options include:

A Line of Credit

A line of credit could be a business credit line from a bank, a business credit card, or a personal credit card or line of credit. Basically, the lender will give you an amount you can spend, such as a credit card limit. You pay interest only on what you spend.


Factoring is a process where you sell your invoices to a third-party company. The factoring company then sends a percentage of what is owed back to you. Since you’re selling the invoices, and not receiving a loan, your poor credit isn’t an issue.

Online Business Loan

There are some online lenders out there who will look at your business’s performance and base their loan decision on that rather than your credit score. The interest rate is usually higher, but you can often get the money within a few days. The process is pretty simple, making these loans worthwhile if you need the money fast.

Merchant Cash Advances

A merchant cash advance is a loan that a business pays for with a portion of your credit and debit card sales or automatic withdrawals from your bank account. The interest rates are very high and some have weekly repayment requirements so these should be a funding source as a last resort.

Private Lenders

Private business lenders have a lot more flexibility than a bank or other loan company because private lenders represent a group of investors who are willing to take a risk on a loan to your business. As a result, they may be more likely to approve a loan despite your bad credit.

Stock Loans

Stock loans use your business or company stocks as collateral to obtain a loan. You don’t sell the stock, but simply use them as collateral to get financing, so you never lose control of them.

Now What?

Although getting a working capital loan when you have a low credit score is not ideal, it is not impossible. Now that you have a few options, contact us to see how we can help you keep your business up and running.

Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.