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Small Business Loans for Bad Credit in Australia

Having bad business credit shouldn’t mean you have to miss out on strategic growth opportunities when you’re short of capital. Learn how to secure bad credit business loans in this article.

Having bad credit makes it challenging to apply for small business financing regardless of whether your company is profitable or you have a good track record.

What do we mean by bad credit?

Bad credit means your credit rating (credit score) is lower than the average, which is 600. This score is a tally of your repayment history across credit cards, loans and other monthly payments like your rent or even utilities.

Whenever you miss one of these payments it can decrease your credit score.

Conversely, paying on time, lowering your credit utilisation rate (not using the maximum available funds), using credit checks sparingly and ensuring there are no mistakes on your credit report are some ways you can improve your rating.

But you don’t have to stress if you have bad credit. It’s still possible to get a business loan. However, you may need to accept a higher-than-average interest rate or provide collateral (such as a vehicle) for the loan.

Business women looking at documents and a laptop

How to get bad credit business loans

While challenging, there are a few simple steps you can take to help you secure a business loan regardless of your credit score.

1. Ensure your credit score is accurate

In some instances, there may be errors in your credit reports that result in you being unfairly penalised. So, the first thing you should do is request a credit report and look for inaccurate or incomplete information.

For example:

  • Identity errors such as having line items with the wrong name, address or contact information.
  • Accounts being reported inaccurately such as closed accounts that are labelled as open and vice versa.
  • Incorrect payment histories such as duplicate entries or previous payments that are missing.
  • Balance errors such as incorrect credit limits.

You can also outsource this work to a credit improvement agency if you want a professional opinion.

2. Review and update your business plan

Since you have bad credit, you want to showcase your professional and personal strengths in your business plan to get your application over the line.

Some things to mention include:

  • Professional experience: While your credit score is a key aspect of lending approval, factors like your industry and entrepreneurial experience, education and network can also improve your chances of getting a loan with bad credit.
  • Invested capital: The more capital you invest in your company, the more lenders will believe in your commitment to success. If you haven’t invested a significant amount, outline your future plans for capital injection.
  • Collateral: Outline every piece of equipment that your business owns and include their dollar values. Doing so will increase lender confidence as you have assets that can contribute to repayments in case of default.
  • Business metrics: Highlight all the metrics that show your business is performing well, such as year-over-year revenue growth, customer growth, etc. If some important metrics aren’t quite up to scratch, you can also explain how you plan to improve them and how the loan will support you.
  • Industry outlook: Showcasing your industry’s potential can help lenders focus on the positive aspects of your application. Detail how your business plans to compete in the marketplace and what makes it unique.

3. Outline what you’ll use the money for and how you’ll pay it back

If your credit score isn’t enough to make lenders confident, you have to instil that confidence with an action plan.

Outline exactly how you’ll use the money and how the capital injection will provide you with a return so that you can successfully pay the money back. For example, if you need a key piece of equipment that can help you provide better service than your competitors, explain how much your business can grow after the purchase.

While returns aren’t guaranteed and anything can happen, demonstrating your capabilities to lenders goes a long way towards securing a loan.

4. Consider the type of business loan you need

There are several types of bad credit business finance you can apply for, with some being easier to get with bad credit – although some aren’t actually classified as loans, they still provide a capital injection.

These are the main types:

  • Term loans: These are your standard business loans where you receive a lump sum of capital and pay it back at regular intervals. While term loans are the most difficult to get with bad credit, there are many online lenders that will provide bad credit business funding with higher rates and fees.
  • Lines of credit: This is a good option if you occasionally need funds to cover capital shortfalls since you can draw on your credit as needed. While interest rates are higher than term loans they’re typically lower than credit cards, making it a good option for short-term funding.
  • Equipment financing: Equipment financing is one of the easier options since the equipment will function as collateral for the loan. However, the drawback is that you can only use the funds for one purpose.
  • Invoice financing and invoice factoring: Like lines of credit, this option is helpful for covering short-term expenses. Invoice financing involves borrowing against your outstanding invoices whereas invoice factoring involves selling your outstanding invoices to a factoring company for a fee. While it’s relatively easy to qualify because lenders aren’t concerned with your credit history, you typically pay more for these services.
  • Merchant Cash Advances (MCAs): If you operate a retail-focused company, MCAs can be a good option as they advance a lump sum payment against future debit and credit card sales. Like the option above, these are easy to qualify for but can result in expensive repayments so they’re better for short-term funding.

5. Start your applications

After you’ve followed the steps above, it’s time to put pen to paper and start your applications.

Where possible, opt for lenders that use soft credit checks as multiple hard inquiries can lower your credit score even more. There are also lenders that offer no-credit-check loans which is another good option.

Australian money

Where to find small business loans for poor credit in Australia

While a Google search can pull up a host of bad credit lenders, here are six reputable companies that offer low credit score loans:


Lumi is a reliable business lender offering flexible access to revolving capital from $5,000 to $500,000 – no hidden fees or early repayment charges included.

Their application process is straightforward, giving you an answer in as little as two hours without impacting your credit score. Once approved, you can receive same-day funding with no collateral required.

Lumi’s interest rates average 14% per annum but vary between 9% - 24% in most cases.

ALC Commercial

While guaranteed start-up business loans for bad credit are extremely rare, ALC Commercial offers no credit check business loans, giving you the opportunity to secure funds without worrying about your credit score.

These loans are particularly beneficial if you’re looking for a bad credit start-up business loan since ALC isn’t concerned with your credit rating.

Interest rates for ALC's no credit check business loans vary based on the loan type and your organisation's financial evaluation. However, you can be sure that all fees and interest rates are disclosed upfront, ensuring transparency and eliminating surprises.


When it comes to bad credit business loans with guaranteed approval, the closest you’ll likely get is asset financing as it involves the asset as collateral.

With ScotPac, you can secure funds for up to 100% of the cost of a new asset, giving you the opportunity to grow your business with strategic purchases.

Once approved, ScotPac funds your account in as little as 24 hours and offers flexible repayment terms, extending up to 5 years. While ScotPac doesn’t list interest rates on its website, Small Business Loans Australia estimates that it’d be in line with the industry average of 10%.


Prospa offers a seamless borrowing experience with repayment terms ranging from 3 to 36 months. However, you’re still able to pay off your loan early without additional fees.

You'll receive a decision the same day you apply with Prospa funding anywhere from $5,000 to $500,000 depending on your application.

While Prospa does use an internal credit check system, their website says a loan’s most important eligibility criteria is that you’re an active member of the company. They also look at the health of your business across 450 different pieces of information to ensure you get a suitable loan with fair terms.


Like most loan providers on this list, MaxFunding gives you a decision within 24 hours, giving you quick access to a small bad credit loan of $3,000 to $50,000.

The company offers repayment terms ranging from 1 to 36 months and, according to their website, interest rates start at 1.5% per month.

MaxFunding also offers different repayment periods from a lump sum on maturation to monthly payments so you can pick what works for you.


An alternative option to loans for bad credit is Marmalade, a leading provider of invoice-based funding solutions.

With this option, your business can access immediate funds by selling Marmalade your unpaid invoices, converting them into cash when you need it most – no credit score necessary.

One of the standout benefits of Marmalade's invoice factoring is the speed at which you receive payment. As soon as your invoices are issued, you can receive instant payment for a one-off fee of just 3-5%.

A couple applying for a start-up loan


Can you get a business loan with bad credit?

Yes, it’s certainly possible to get a business loan for bad credit in Australia. However, you may have to accept higher interest rates or other unfavourable terms to secure the loan.

How fast can I get a loan for bad credit?

While every lender is different, you can get a quick loan for bad credit in as little as 24 hours if your application is attractive enough to your chosen lender.

What can I do if my business has bad credit?

If your business has bad credit, there are several steps you can take to improve your chances of obtaining a loan:

  • Review your credit report for errors and duplicate entries.
  • Build your credit by making future payments on time.
  • Provide collateral or a personal guarantee for the loan.
  • Apply for funding with alternative lenders as traditional banks are typically more strict with approvals.
  • Apply with a partner that has a stronger credit profile.

What is the easiest loan to get?

Generally, secured loans (those backed by collateral) may be easier to obtain since they pose less risk to the lender. Additionally, invoice factoring and merchant cash advances are typically easier to get than loans since these lenders aren’t concerned with your credit score.

Can I get a start-up business loan with bad credit?

Getting a start-up business loan with bad credit can be more challenging, but it is not impossible. You’ll need to build a compelling case for your application with a solid business plan and apply with the right lenders, such as those without credit checks.

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The bottom line: loans for bad credit

When it comes to loans for bad credit, the most important thing to consider is whether you can successfully manage the repayments. This is because these types of loans typically have higher interest rates and shorter repayment periods than traditional loans.

On the other hand, making all your payments on time will go a long way towards improving your credit score which will give you more financing options in the future.

You can also spread your loans across different credit types, such as asset loans, credit cards and more which can help quickly improve your credit score.

Make sure to check out our business financing guide to learn about your funding options once your credit rating improves.

Now it’s your turn to get out there and secure a business loan to spark growth and turn your credit history around.

Good luck!

Megan Kelly

About the author

Megan is Head of Content Marketing at She is an expert copywriter and content marketer.