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How Credit Scores Impact Secured vs. Unsecured Small Business Loans

When seeking financing for your small business, one of the foremost factors lenders evaluate is your personal and business credit scores. The minimum score requirements tend to vary based on whether the loan is secured or unsecured. For entrepreneurs with less-than-stellar credit, alternative options like merchant cash advances may be a better solution.

Key Takeaways

  • Credit scores help lenders evaluate loan risk and eligibility. Higher scores mean better approval odds.
  • Secured loans can be obtained with lower credit scores, around 600. Unsecured loans generally require 680+.
  • Poor credit makes getting traditional financing difficult. Alternatives like merchant cash advances exist.
  • New Bridge Merchant Capital offers fast financing based on future sales rather than credit scores.

Understanding Credit Scores and Their Role in Lending

A credit score represents your creditworthiness as a single number based on your borrowing and repayment history. Scores typically range from 300 to 850. The higher your score, the lower the risk you pose to a lender.

Lenders rely heavily on credit scores when deciding whether to approve loans. Your interest rates and loan terms will also be affected by your score. Minimum thresholds are often in place.

Secured Loans Have More Flexible Credit Requirements

Secured small business loans require pledged collateral, usually a business asset like equipment. This collateral reduces the lender’s risk. If you default, they can seize the asset to recoup losses.

Because of the lower risk, secured lenders can be more flexible with minimum credit scores, often around 600. Better terms will be available in the 680+ range.

Unsecured Loans Require Stronger Credit History

With unsecured loans, no collateral is pledged, meaning the lender takes on higher risk. To compensate, they impose stricter credit requirements.

A minimum score around 680-700 is more common for unsecured loans. Some lenders may require scores over 720. They also want a strong credit history with few late payments.

Applicants need to demonstrate an ongoing ability to manage debts responsibly over time. High revolving credit utilization can also lead to denial.


Loan Type
Typical Minimum Credit Score
Secured Loan Around 600
Unsecured Loan 680+
Merchant Cash Advance None, based on credit card sales

When Your Credit Falls Short – Alternatives to Explore

When Your Credit Falls Short – Alternatives to Explore

If your personal or business credit scores don’t measure up for traditional loans, all hope is not lost. Consider these alternative funding strategies:

  • Apply with alternative lenders known for being more flexible on credit
  • Focus on incrementally improving your credit profile and score
  • Consider merchant cash advances, which don’t rely on credit scores
  • Merchant cash advances from New Bridge base approvals on future sales

Get Fast Financing with New Bridge Merchant Capital

At New Bridge Merchant Capital, we understand the difficulties business owners with poor credit face in securing financing. That’s why we offer fast, flexible merchant cash advances.

Our merchant cash advances don’t require good credit, business plans, or collateral. Instead, we focus on your future credit card sales to quickly inject capital into your business.

New Bridge can approve your application in minutes and fund in as little as 24 hours. Let us help you get the financing you need to grow, regardless of what your credit report says.

In summary, credit scores significantly impact your chances of securing both secured and unsecured small business loans. But for entrepreneurs with less-than-ideal credit, viable options exist. Connect with New Bridge Merchant Capital today to explore customized financing solutions designed for you.


  • What is considered a good credit score for a small business loan?
    • 680 and above is ideal. Secured loans may be possible with scores around 600. Unsecured loans generally require 680+
  • Will my personal credit score impact business loan eligibility?
    • Yes, lenders often review personal credit, especially for startups with limited business history.
  • How can I improve my credit score?
    • Pay bills on time, lower credit utilization, correct errors on your credit report, and don’t take on new debt before applying.
  • What financing options exist for poor credit small business owners?
    • Alternative lenders offer more flexibility, or consider merchant cash advances which don’t rely on credit scores.
  • Does New Bridge Merchant Capital check credit scores?
    • No, New Bridge focuses on future credit card sales rather than credit scores when approving merchant cash advances.

Work With a Leading Commercial Lender

At NewBridge Capital Solutions, our loan products can help businesses of all sizes. With our exceptional customer service and reputable funding, we have become a trusted leader in the commercial finance industry. If you want to apply for a term loan that can provide working capital for your business, make sure to contact us.
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