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  • Compare your best bad credit business loan options from top Australian, with no credit score impact.

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What are bad credit business loans?

Bad credit business loans allow businesses and sole traders in Australia to access cash that may not be available through other forms of finance.

They are generally offered for shorter terms and there may be restrictions on how much you can borrow with a bad credit business loan.

Bad credit business loans in summary...

  • Borrow from $5,000 to $1million
  • Application assessed on the cash flow strength of a business
  • Loan terms from 1 - 36 months
  • Usually higher interest rates and fees than other business finance
  • Providing security (collateral) can help but it’s not always required
  • Available from banks and specialist bad credit business lenders
  • May require a personal guarantee from the director of the business

Who is eligible for a bad credit business loan?

To be eligible for a bad credit business loan, you’ll need to meet these criteria:

  • Own a business and have an ABN (self employed individuals and sole traders may also qualify)
  • Business is GST-registered
  • Australian citizen or permanent resident
  • Minimum business-operating time of six months (but ideally 12 months)
  • Can provide business bank statements and meet lender's revenue requirements
  • Not currently bankrupt

How do bad credit business loans work?

Bad credit business loans are a type of short-term business finance designed for small businesses and business owners with a poor credit score, a limited credit record, or a history of defaults or dishonours.

A bad credit score presents a greater risk to lenders, so interest rates will often be higher than other forms of business finance. Lenders usually also offer shorter loan terms.

A bad credit business loan in Australia is similar to an unsecured business loan. Bad credit lenders will generally look at the credit history in detail (not just the score) and revenue of the business to determine whether it is eligible for a loan.

Bad credit business loans can provide access to funds when a small business is unable to obtain finance approval elsewhere. Other ways of accessing funds quickly include invoice finance, a business line of credit and a business overdraft.

If you are approved for a bad credit business loan:

You will have immediate ownership of anything purchased


You will make regular repayments to the lender for a fixed period of time

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You can set up the repayment frequency to suit your budget

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Your interest rate will either be fixed or variable depending on the loan

Best bad credit business loan rates

Interest rates on bad credit business loans can range anywhere from 15% to 35%. The actual rate applied to your loan will depend on a number of factors, including:

  • The trading history of the business
  • The reputation of the business with suppliers and customers
  • The credit history of the business (i.e. why are there issues and how long ago were they?)
  • The length of the loan period
  • The value of any deposits or security — if any — used on the loan (e.g. a bad credit truck loan where the truck serves as security may have a lower interest rate than an unsecured loan)

How much can I borrow with a bad credit business loan?

Depending on your risk profile and your capacity to service your repayments, you may be able to borrow between $5,000 and $1 million with a bad credit business loan.

The amount you can borrow is usually less than standard business loans, but a bad credit business loan can act as a stepping stone to accessing more credit down the line.

For example, it can be a good way of improving your credit score and building trust with a lender.

Here's how that could work...


Your business wants to borrow $50,000


A lender may only be comfortable approving a $20,000 loan


You show that you are capable of repaying the $20,000 loan


The lender may increase the amount of available credit for future loans at a lower interest rate

Who uses bad credit business loans?

Bad credit business loans are generally used by small business owners who have either defaulted on a previous loan or have some negative history on their credit file.

They can also be used by sole traders or the director of a business when personal or business assets are tied up due to court proceedings — such as divorce — or if the individual has a poor personal credit score.

In Australia, bad credit business finance is often used by:

  • Ex-bankrupts
  • Business directors involved in a Part IX agreement
  • Business directors with a poor individual credit score
  • Businesses where assets are tied up in court proceedings or cannot be accessed
  • Businesses where there is uncertainty over the ability to repay the loan

How to apply for a bad credit business loan

The approval process for bad credit business loans is similar to other types of small business loans, but puts greater focus on your ability to prove you can repay your loan and how the money will benefit your business.

Due to the increased risk, lenders will often require more extensive documentation to assess your application.

Documents required for a bad credit business loan

  • Proof of identity
  • An ABN and GST registration
  • Business bank statements
  • Trust Deed if the business is held in a trust
  • Australian Tax Office (ATO) Portal access
  • Financial records (provided by your accountant) including profit and loss statements and balance sheets
  • Details of the asset you wish to purchase

Ex-bankrupt business loans

Some lenders will consider applicants who are discharged from bankruptcy, usually for a minimum of six months. There will be fewer lenders to choose from, and you should expect higher interest rates and fees to reflect the increased risk for the lender.

You may also need to supply collateral (security), or be asked to include a guarantor on your loan.

Before you apply for a loan following bankruptcy, consider:

How have your assets and income been affected by bankruptcy?


Can you show lenders that you are able to meet your repayments?

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What will your repayments be and how will they work with your budget?


Are there any other finance options available to you?

Can I get a no credit check business loan?

Very few, if any, Australian lenders offer no credit check business loans or bad credit business loans with guaranteed approval.

Lenders usually look into the credit history of the business and its directors when assessing the loan application.

Ready to compare bad credit business loans?

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Compare the best business loan options

The type of finance that will suit best depends on your business, what it needs funds for and how soon.


Yes it does. However, there are different lenders who will consider your application and assess it under their individual criteria. For example, your bank may not approve a bad credit business loan based on the risk you present as a borrower, but a specialist subprime lender may approve your application based on the strength of your current business revenue alone.

No. In most cases, a deposit will help you get a better interest rate, and offering security — such as your personal assets — on the loan may also provide a better rate.

As approval for a bad credit business loan is determined by the current cash flow of the business, you won’t be required to put down a deposit if you’re willing to accept higher interest rates or fees.

Yes. Bad credit business loans can be used for any genuine business purpose, including the purchase of new business assets to replace your existing ones.

Interest rates will typically be higher for bad credit business loans than other forms of business finance. Unless you are able to provide collateral on the loan as security, you will likely be offered interest rates in the same area as an unsecured business loan.

Fees for a bad credit business loan will vary from lender to lender. You may be charged an initial set-up fee, monthly admin fees, and more. Each lender will have different rates and fees, so it’s important to compare which is most suitable for your business and will match your ability to repay the loan.

Yes, you can usually repay your bad credit business loan early by making extra repayments. Doing this and closing credit accounts in general can impact your credit score positively.

However, you should carefully read the fine print of your loan agreement to determine if there will be any early repayment charges or penalties (break fees).

Shaun McGowan Money.com.au founder

Written by

Shaun McGowan

Shaun McGowan is the founder of Money.com.au. He's determined to help people and businesses pay as little as possible for financial products, through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

Sean Callery Editor Money.com.au

Reviewed by

Sean Callery

Sean Callery is the Editor of Money.com.au. He has over 15 years of international experience. He is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821) and is compliant to provide general advice in Tier 1 General Insurance (RG 146) products.


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