​​If you’re a business owner looking to secure funding, you’ve probably heard that your credit score can have a big impact on your ability to get approved. But what exactly is a credit score, and how can you get funding if yours isn’t perfect?

In this article, we’ll walk you through the basics of credit scores for small business owners and show you how you can still secure funding, even if you have bad credit, by exploring alternative lenders, offering collateral, or leveraging strong business performance to mitigate credit risks.

How to get small business funding with bad credit

There are a few ways that you can secure a business loan, even if you have bad credit:

Alternative Lenders 

Traditional banks aren’t the only source of funding for SMEs. Alternative lenders offer a range of flexible financing solutions, often with faster approval times and more accessible criteria than high-street banks. These lenders include online business loan providers like Bizcap, peer-to-peer lending platforms, and specialist finance companies. 

Alternative finance can be particularly useful for businesses with limited credit history or those that require quick access to capital without the lengthy paperwork of traditional loans.

Secured Loans

Secured loans allow businesses to borrow funds by using assets - —such as property, vehicles, equipment, or invoices - —as collateral. By securing the loan against a tangible asset, businesses can often access higher loan amounts with lower interest rates, as the lender’s risk is reduced. 

This type of finance is beneficial for SMEs looking to make significant investments while keeping repayment terms manageable. However, it’s essential to consider that failing to meet repayments could result in the loss of the asset used as security.

Strong Business Metrics 

Lenders assess various financial indicators before approving funding, so showcasing strong business metrics can improve your chances of securing finance. Consistent revenue, a solid profit margin, and a clear growth trajectory demonstrate financial stability and repayment ability.

Businesses with well-documented financial records, a growing customer base, and a healthy cash flow position are more likely to qualify for competitive loan terms. Providing detailed financial statements and forecasting future growth can help strengthen a loan application.

What is a credit score?

A credit score is a numerical representation of your creditworthiness, or in simpler terms a number that represents the likelihood you pay your bills on time.  

But what factors influence this number?

Your credit score is shaped by your financial history, including loans, repayments, defaults and other credit activities. Lenders use it to assess the risk of providing funds to you or your business. In Germany, credit ratings are typically assessed by organisations such as SCHUFA (Schutzgemeinschaft für allgemeine Kreditsicherung), CRIF Bürgel, and Creditreform Boniversum.

Do all businesses have a credit score?

Not all businesses automatically have a credit score - it depends on their financial activity. If your business has taken out loans or set up supplier credit arrangements, a credit rating may be created.

For sole traders, personal credit scores often play a key role in financing, while companies can build a separate business credit file through their financial transactions. Establishing a credit history is essential for businesses seeking to demonstrate reliability to lenders.

In Germany, companies such as SCHUFA and Creditreform maintain business credit profiles for entities like GmbH, UG, and Einzelunternehmen. These reports are used by banks, lenders, and suppliers when evaluating a company’s reliability.

How do I check my credit score in Germany?

Checking your business credit score is a smart first step before applying for funding.

In Germany, you can request your credit file from SCHUFA (Schutzgemeinschaft für allgemeine Kreditsicherung) or other agencies such as CRIF Bürgel or Creditreform Boniversum.

You can typically get one free copy of your data report (“Datenkopie nach Art. 15 DSGVO”) each year. This lets you check for errors and understand how lenders might view your business.

Can I get a business loan with a bad credit score?

Yes, you can get a business loan even with a low credit score, as long as you work with the right lender.

Traditional banks and other lenders often rely heavily on strict credit score requirements, but alternative lenders in Germany, like Bizcap, focus more on your business’ current performance and cash flow rather than solely on your SCHUFA score.

We specialise in helping businesses with bad credit, and Bizcap doesn’t impose minimum credit score requirements or conduct upfront checks. Instead, we use a unique credit assessment model that evaluates cash flow, business potential and your overall financial situation.

With Bizcap, you can access the funding you need, regardless of past credit challenges.

What credit score is required to get a business loan?

There isn’t a single “minimum” score required to get a business loan. Every lender has different criteria, and in Germany, credit assessment models differ between SCHUFA, Bürgel, and Creditreform.

Generally, the better your credit score, the better your chance is at getting a loan. However, at Bizcap, your credit score isn’t the sole factor considered, offering flexibility that helps businesses access funding even with less-than-perfect scores.

How to apply for a business loan in Germany with bad credit?

Applying for a business loan with a low credit score can feel challenging due to the strict criteria many lenders impose. This often leaves businesses struggling to secure the funds they need.

Bizcap makes the process easier with no upfront credit checks and a simple application process. Here’s how to apply for our small business loans:

1. Ensure You Meet Our Eligibility Criteria

  • Be a registered business in Germany (e.g. GmbH, UG, or Einzelunternehmen) 
  • At least five months of trading
  • A minimum monthly revenue of €12,000

2. Complete a Quick Application Form

Fill out our simple, three-minute online application and upload your bank statements to ensure we can process your application that same day.

3. Receive an Initial Offer Fast

Eligible businesses could receive an offer within 24 hours.

4. Review and Accept Your Loan Offer

Once satisfied, let us know. Additional documents may be requested to finalise the process depending on your unique circumstances.

How can I improve my chances of approval?

If you’re applying for business funding, taking proactive steps to strengthen your application can increase your likelihood of approval. Here are some key tips:

  • Maintain strong business financials: Keep up-to-date financial statements, tax records, and cash flow reports to demonstrate stability.
  • Improve your credit score: Pay down existing debts, make timely payments, and check your SCHUFA or Creditreform report for errors and request corrections if necessary. 
  • Consider a guarantor or collateral: Offering security, such as business assets or a guarantor, can reassure lenders and improve approval chances.
  • Show consistent revenue: Lenders look for reliable income streams, so ensure your business demonstrates steady or growing turnover.
  • Apply for the right type of finance: Different funding options have different requirements. Choose one that best suits your financial situation and business goals.

By preparing a well-documented application and choosing the right lender, you can boost your chances of securing the funding your business needs.

With Bizcap, there’s no need to worry about credit scores holding you back. Click here to learn more about the documents required and start your loan application today!

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This information is general in nature and does not constitute financial or business advice. You should consider whether any financing options are appropriate for your circumstances.

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