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Bad Credit Business Loans

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Bad Credit Business Loans

Written by

Shaun McGowan

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

In summary

  • Gives a borrower fast access to cash
  • Is often only assessed on the cash flow strength of a business
  • Will likely have higher interest rates and fees than other forms of business finance
  • May not require any collateral or security
  • Can be obtained from banks, non-bank lenders and through finance brokers
  • May require a personal guarantee from the director of the business

Key Features

  • Borrow from $5,000 to $500,000
  • Fixed or variable interest rates
  • Repayments to suit your budget
  • Terms from one month to five years
  • Secured & unsecured options

Who is eligible?

  • Own a business and have an ABN
  • Business is GST-registered
  • Permanent Citizenship or Residency
  • Minimum business-operating time of six months
  • Can provide business bank statements

Shopping around for the right loan can save you thousands of dollars in interest and fees.

What is a Bad Credit Business Loan?

Bad credit business loans are a type of short-term business finance designed for businesses (and business owners) with a poor credit score or a history of defaults or dishonours. A bad credit history presents a greater risk to lenders, so interest rates will often be higher than other forms of finance.

A bad credit business loan in Australia is similar to an unsecured business loan — lenders will generally look at the credit history and revenue of the business to determine whether it is eligible for a loan. They can provide access to funds when a business is unable to obtain finance approval elsewhere.

If you are approved:

  • A lender will provide you with access to funds.
  • You will have immediate ownership of anything purchased.
  • You will make regular repayments to the lender for a fixed period of time.

Need fast access to finance or a one-time credit facility?

Small business

Ex-bankrupt Business Loan?

Some lenders will consider applicants that have been recently 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 reflective of the increased risk to the lender.

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

Before you apply for a loan following bankruptcy, consider:

  • How your assets and income have been affected by bankruptcy
  • Can you show lenders that you are able to meet your repayments?
  • What will your repayments be and how will they work with your budget?
  • Are there any other finance options available to you?

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.

To increase your chances of approval, you should prepare a business plan to illustrate:

  • How you intend to use the funds to grow or support the business
  • Financial projections for the business following funding use
  • Details of business expenditure and how you plan to successfully repay the loan
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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 be dependent 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
  • The length of the loan period
  • The value of any deposits or security — if any — used on the loan

The amount a lender will approve for a bad credit business loan will greatly depend on how much your business can afford to borrow. Depending on your risk profile and your capacity to service your repayments, you may be able to borrow between $5,000 and $150,000.

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

  • 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.

Most lenders will offer a bad credit business loan for a term of 1 - 12 months. The shorter terms compared to other forms of business finance are due to the increased risk presented to the lender. aims to clear up the confusion around rates and approval, so we can provide the best consumer experience possible. We only show you real, personalised rates from lenders who can give you approval on the loan. No hidden fees, no inflated rates, no stress, and no impact on your credit score.

Just real rates, from real lenders, who you can apply with immediately to get real deals. (Yes, really!)

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How to qualify and apply

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

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

In Australia, this type of 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

The qualifying criteria are similar to an unsecured business loan. Most lenders will be able to provide options if you have:

  • Been trading for at least 12 months; and
  • Have an ABN (Australian Business Number); and
  • Are registered for GST.

However, you can still apply if you:

  • Are self-employed
  • Are a sole trader
  • Have been trading for between 6 - 12 months

As this type of finance presents a high level of risk to a lender, they will often require more extensive documentation to assess your application.

Here’s what you may need to provide to a lender when applying:

  • Proof of identity
  • An ABN and GST registration
  • An acceptable credit rating — the lender will ask to conduct a credit check
  • 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

Money Tip: Business finance brokers operate all across Australia, and you can find one of these experts to help you with a bad credit business loan whether you're located in Melbourne, Brisbane, Sydney, Adelaide, Perth, Newcastle, or Canberra.

Here are the most popular bad credit business loan questions people are asking:

Does personal bad credit affect business loans?

Yes. 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.

Will I need to put down a deposit for a bad credit business loan?

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.

Can I use a bad credit business loan to replace existing assets?

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.

What is the typical interest rate I can expect to pay on bad credit business loans?

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.

What type of fees can I expect to pay on bad credit business loans?

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.

Can I repay my loan early?

Yes. It’s highly likely you can repay your bad credit business loan early, though you should carefully read the fine print of your loan agreement to determine if there will be any extra payment charges or penalties. If there are, then it may be detrimental to your business finances to repay the loan earlier than stated.

About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.


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Money Pty Ltd (trading as provides information about credit products and is authorised to do so as the holder of Australian Credit Licence 528698. does not compare every Lender in Australia. We are not a broker or credit provider and when we provide information via this website, we are not providing you with a recommendation or suggestion about a particular credit product. When you apply for a credit product via the website, you are not applying with us, you are applying directly with a Lender Partner. Before entering into any credit product from one of our Lender Partners, you should confirm the rates and product information with the Lender. All information on this website is general advice only and does not take into account your objectives, financial situation or needs. You should consider whether this advice is right for you and we encourage you to seek independent financial advice.