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How to find business loans with bad credit

3-minute read

It can be difficult to get approved for business loans with bad credit. But it may not be as bad as you think. Learn how you may be able to overcome it.

Key take-outs
  • Your personal credit score can influence your ability to get a business loan
  • You can request a credit report for free and get a full rundown of your credit history within 10 days
  • Paying bills on time and reducing your credit card limit are some ways to improve your credit score
  • Putting property up as security for a business loan may be an option for owners with a poor credit history

There are countless reasons why your credit score may have been impacted – missed or late payments, loan defaults or simply making too many credit enquiries. But that doesn’t necessarily mean you have to put your business journey on ice or allow it to prevent you from getting the finance you need to thrive. There may still be ways to secure a business loan with bad credit.

Can my personal credit history impact my ability to get a business loan?

Yes. Depending on how long your business has been operating, a lender will most likely review your personal credit history as well as your business credit history. The former includes things such as your personal bank accounts, credit cards, whether you’ve previously operated a business, as well as loan defaults and missed payments (known as ‘negative listings’).


It can be challenging to get approved for business loans when your credit history has been impacted, but it’s not impossible. The first step is understanding your credit score and then taking the proper steps to improve it. If you need a loan urgently, then you will likely need to put up an asset (e.g. property) as security.


Some lenders also offer bad credit business loans, which are similar to standard unsecured, short-term loans but usually feature higher interest rates. The pool of potential lenders for these is likely to be a lot smaller, so it might be helpful to seek professional advice to help point you in the right direction.

How to check your credit score

You might be surprised by just how many business owners don’t know their own credit score. Before applying for a business loan, it might be worth getting a credit check through one of the three registered agencies in Australia: Equifax, illion and Experian. It’s free and takes about 10 days to get your results.


In the credit report, you’ll find details on your repayment history, credit applications, defaults, credit products, previous bankruptcies, as well as any requests for a credit report you’ve made in the past. Make sure you check through all the information in detail. If there are mistakes, contact the credit reporting agency to have them fixed.

Ways to improve a bad credit history

So you’ve received your credit report and it’s not great news. Now what? Your hopes of securing a business loan are still alive, but it’s important to start taking steps to fix your credit immediately. Here are some tips to do just that:

  1. Reduce your credit limit: If you never get close to hitting the maximum amount, you could reduce your credit card limit for a boost to your credit score.
  2. Pay your bills on time: This includes utilities such as electricity and gas, as well as your rent or mortgage repayments.
  3. Pay off more than the minimum: Make sure you’re paying off your credit card debt every month – in full, if possible.
  4. Find the right lender: Putting in too many loan applications can reflect poorly on your credit score. So do your research and find the most suitable lender for your business loan.
  5. Ask for help when you need it: If you are struggling to meet your repayment commitments, the worst thing you can do is ignore them. Instead, speak to your lender or credit provider about financial hardship support to help you get through the leaner months.

Seek out a secured loan from a lender who understands your business

If you need a business loan fast and don’t have the time to significantly improve your credit history within the time frame you need it, a lender who has experience with those sort of cases might be best placed to help. Depending on your circumstances, a secured business loan, where you provide an asset as loan security, might be an alternative to get the funding you need even with a less-than-stellar credit history.


Bad credit isn’t the end of the world – and it shouldn’t be the end of your business, so don’t let it. By taking proactive steps, you can get back on the path to good credit and secure that business loan to help you stay competitive.

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Things you should know

This information does not take into account your personal circumstances and is general. It is an overview only and should not be considered a comprehensive statement on any matter or relied upon. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this article, including when considering tax and finance options for your business. Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.