Bad Credit Business Funding: Your Options in 2026

A low credit score can make a bank loan hard to get, but it doesn't mean your business can't be funded. Several types of business funding focus on your revenue, your equipment, or your invoices rather than your credit history. Here's an honest look at the main options, what they cost, and when each one makes sense.

Why credit matters less for some types of funding

Traditional banks rely heavily on credit scores because they're lending money over long terms. Many alternative funding options look at something else instead: how much revenue your business brings in, the value of the equipment being financed, or money your customers already owe you. That shift is what opens the door for business owners with lower credit.

1. Merchant cash advance

How it works: You receive capital upfront in exchange for a portion of your future sales. It is not a loan, and repayment comes from a share of your revenue.

Why it works with bad credit: Approval is based mainly on revenue and cash flow.

Speed: Often among the fastest options, with funds that can arrive in as little as 24 hours after signing.

Cost: Higher than most other options. Always ask for the total repayment amount.

Best for: Businesses with steady revenue that need capital quickly.

2. Revenue-based financing

How it works: Similar to an MCA, you receive capital and repay it as a percentage of your monthly revenue, so payments rise and fall with your sales.

Why it works with bad credit: It is underwritten mainly on revenue history.

Cost: Varies by provider, often more expensive than a bank loan.

Best for: Businesses with consistent monthly revenue, including online and subscription businesses.

3. Equipment financing

How it works: You finance a specific piece of equipment, and the equipment itself secures the financing.

Why it works with bad credit: Because the equipment serves as collateral, credit requirements are often more flexible.

Cost: Often lower than unsecured options.

Best for: Buying or replacing vehicles, machinery, kitchen equipment, or other essential assets.

4. Invoice factoring

How it works: You sell unpaid invoices to a factoring company at a discount and receive most of the value upfront, instead of waiting 30 to 90 days for customers to pay.

Why it works with bad credit: Approval depends largely on your customers' ability to pay, not your credit.

Cost: A percentage of the invoice value, depending on how long invoices take to be paid.

Best for: Business-to-business companies with slow-paying customers.

5. Business line of credit from an online lender

How it works: You get access to a set amount of funds and draw on it as needed, paying only for what you use.

Why it can work with fair credit: Some online lenders accept lower scores than banks, though requirements are usually stricter than for an MCA.

Best for: Ongoing, flexible needs like covering gaps in cash flow.

How to choose the right option

Start with three questions:

• How fast do you need the money? If it's urgent, an MCA or revenue-based financing may be the most realistic option.
• What are you funding? If it's equipment, equipment financing is often cheaper. If customers owe you money, factoring may make sense.
• What can your cash flow support? Make sure the repayment fits comfortably within your revenue, even in a slower month.

Whatever you choose, compare offers by the total amount you'll repay, not just the payment size.

How to improve your options over time

Keep business and personal finances separate, avoid overdrafts, and make every payment on time. Steady deposits and on-time repayment can open the door to lower-cost funding in the future.

How Fidelity Funding Group can help

Fidelity Funding Group is a business funding broker. We work with a network of funding partners, so we can look at your situation and present the options that fit, explaining the full cost of each.

Fidelity Funding Group is a business funding broker and does not lend directly. Funding is provided by third-party funding partners and is subject to approval. Merchant cash advances are not loans.