Bad credit makes getting funded through a bank almost impossible. They look at your score, see a number they don’t like, and that’s the end of it. Doesn’t matter if your business is doing $50,000 a month in sales. Doesn’t matter if you’ve been profitable for years. One rough patch on your credit file and banks won’t touch you. If you’re looking for business funding with bad credit in Canada there are lenders that don’t operate the same way banks do.
What Bad Credit Actually Means in Canada
In Canada your credit score is tracked by two agencies, Equifax and TransUnion. Most lenders consider anything below 600 to be poor credit. Between 600 and 650 is fair. Above 700 is where banks start feeling comfortable.
Bad credit usually comes from missed payments, high credit utilization, collections, a consumer proposal, or a bankruptcy. Sometimes it’s from things outside your control. A divorce, a business that struggled during covid, medical bills.
It’s worth pulling your credit report before you apply anywhere. Both Equifax and TransUnion let you check online. If there are errors on your file you can dispute them and have them corrected which can move your score without changing anything else.
Why Bad Credit Stops You at a Bank
Banks use your credit score as a filter. Below their threshold and your application doesn’t move forward. They don’t care why your credit dropped. Divorce, medical bills, a slow year, a business that struggled. None of that changes what’s on the screen.
Banks also want collateral, a personal guarantee, years of financial documents. So even if your credit was fine you might still get declined for other reasons. We cover the most common reasons in our post on how to get business funding based on sales in Canada.
How to Get Business Funding with Bad Credit in Canada
Alternative lenders focus on different things. At Canada Capital we look at your sales. How much revenue your business is bringing in and how consistent it is. A business bringing in $40,000 a month with rough credit is still a business we’d look at seriously.
We offer advances on your future receivables. Fixed cost, daily or weekly repayment, terms from a few months up to two years. No collateral and no personal guarantee. More detail on how this works in our post on how does revenue based financing work.
What Credit Score Do You Need
We don’t have a hard cutoff. Credit is part of what we look at but it’s not what makes or breaks the deal. We’ve funded business owners that banks wouldn’t even sit down with.
If your credit is rough and your sales are also inconsistent that’s a harder conversation. Consistent month over month revenue matters a lot more to us than a clean credit report. Read more about why in our post on what is revenue based lending.
How to Improve Your Chances of Getting Approved
Even with bad credit there are things that make your application stronger.
Know your monthly revenue numbers before you apply. Lenders who don’t rely on credit score lean heavily on your sales history so being clear on what’s coming in each month and how consistent it’s been puts you in a better position.
Be specific about what you need the money for. Saying “I need $30,000 to hire three people before a new contract starts” is a much easier application to evaluate than “I need cash for general expenses.” The clearer the purpose the easier it is to make a decision.
Starting with a smaller amount helps too. If you’re not sure you’ll qualify for a large advance start with something smaller and shorter term. Pay it back and you build a track record that makes the next deal easier.
Have three to six months of bank statements ready. Consistent deposits showing up month over month is the main thing we look at. The cleaner that looks the better your chances regardless of your credit report.
Does Bad Credit Cost You More
Yeah. Lower credit means more risk for the lender and the cost goes up. Someone with good credit and strong sales will get better terms than someone with bad credit and the same sales. We show you the full cost before anything is signed. Total amount, payment schedule, term length. We compare how our pricing works against a bank loan in our post on revenue based financing vs bank loan.
What Happens to Your Credit After You Get Funded
Getting funded through an alternative lender doesn’t automatically improve your credit score. Paying back consistently over time can help depending on whether the lender reports to the credit bureaus.
What it does do is give your business room to grow. A business doing $80,000 a month in consistent revenue has a lot more options than one doing $20,000. Building that sales track record is what opens doors down the road, credit score or not.
Who Qualifies for Business Funding with Bad Credit
Any business in Canada with consistent revenue can qualify for business funding with bad credit.
We funded a restaurant owner who had a bankruptcy on file from four years ago but was doing $60,000 a month in sales. We funded a contractor whose credit tanked after a divorce but had steady jobs lined up for the next six months. The credit history didn’t look good on paper but the businesses were running well and that’s what we based the decision on.
If you’ve been turned down already our post on can’t get a bank loan for my business in Canada covers what to do next.
Government Programs Worth Knowing About
The Canada Small Business Financing Program is a government backed loan that goes through banks. It can help businesses that don’t meet all standard requirements and is worth knowing exists. The process is slow though and it doesn’t cover working capital or day to day cash flow. If you need money for equipment or leasehold improvements and have time to wait it might be worth exploring. If you need capital now it’s not the right fit.
Apply for Business Funding with Bad Credit
We offer revenue based financing for businesses across Canada regardless of credit history. What matters most is what your business is doing right now. More on how to get business funding based on sales if you want to understand what we look at. Apply here and our team will go over everything with you.
