Bad Credit Solutions

Bad Credit Business Loans – Get Funded Despite Credit Challenges

Don't let a low credit score hold your business back. Discover financing options available for Canadian entrepreneurs with bad credit.

March 6, 2026 8 min read By LoanLizard Team

Having bad credit doesn't mean your business financing options have dried up. While traditional banks may turn you away, there are many alternative lenders and financing solutions designed specifically for Canadian entrepreneurs facing credit challenges.

Understanding Your Options

Here's a comprehensive breakdown of financing options available to businesses with less-than-perfect credit in Canada:

Merchant Cash Advances

A merchant cash advance provides you with a lump sum of cash in exchange for a percentage of your future credit card sales. Approval is based primarily on your daily credit card processing volume, not your credit score. You receive funds quickly and pay back as your business earns.

Invoice Financing

If your business has outstanding invoices from B2B clients, invoice financing (or factoring) allows you to borrow against those invoices. Lenders advance you 80-90% of the invoice value upfront, then pay you the remainder (minus fees) once your customer pays. This is an excellent option if you have strong B2B relationships but poor personal credit.

Alternative Lender Loans

Online alternative lenders have become a major force in Canadian business financing. These lenders typically use more flexible underwriting criteria, considering factors beyond just your credit score—such as business revenue, time in business, industry, and growth potential. Interest rates are higher than traditional banks but far more accessible.

Government-Backed Programs

The Canadian government offers several programs that can help businesses with credit challenges access financing:

  • Canada Business Loans Act (CBLA) – Government-guaranteed loans through participating financial institutions
  • Regional Development Agencies – Provincial and regional programs for qualifying businesses
  • Canada Emergency Business Account (CEBA) – Interest-free loans for small businesses (when available)

How to Improve Your Business Credit

While finding funding now is important, building your business credit will open doors to better rates in the future. Here's how:

  1. Pay bills on time – Payment history is the biggest factor in credit scores
  2. Keep credit utilization low – Aim to use less than 30% of available credit
  3. Separate personal and business finances – Get a business credit card and business line of credit
  4. Monitor your business credit report – Check regularly for errors and dispute inaccuracies
  5. Become an authorized user – Building credit history as an authorized user on someone else's account can help

Quick Comparison Table

Option Credit Score Needed Funding Time Best For
Merchant Cash Advance Poor-Fair 24-48 hours Retail, restaurants
Invoice Financing Fair-Good 1-3 days B2B companies
Alternative Lender Fair-Good 1-5 days Various industries
Government Programs Varies 2-6 weeks

Get Matched with Lenders Who Work with Bad Credit

Our network includes alternative lenders who specialize in helping businesses with credit challenges. One form, multiple options.

Get Matched Now