Best Ways to Utilize Bad Credit
Business Loans

Now that you have overcome the obstacle of receiving bad credit business funding because you found a lender that offered business loans with bad credit, you need a strong plan on how to utilize the additional working capital. You have to look at the full cost of your initial plan for taking the loan in the first place, as well as budgeting to see if there is any additional funds available.

Before you start writing checks, sit down and make a plan. It will help you keep on track and ensure that you have utilized your bad credit business loan to its maximum potential. Not sure where to start? Here are 12 of the best ways to utilize a bad credit business loan based on information from small business borrowers over the last five years.

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Below is a list of the requirements to get approved for business funding with our most basic program.

  • At Least 3 Months in Business
  • 530 Min. Credit Score
  • $10,000 Min. Monthly Revenue
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    Cash Flow Management

    Cash flow management can make or break a small business. Cash flow, simply put, is the flow of money in from your customers and the flow of money out to vendors, suppliers, and employees. It is rare for cash flow to align perfectly.

    When cash flow aligns, your customers pay you before your bills come due. You always have money in the bank to handle your responsibilities exactly when you need it. But many small businesses have found that this is rarely the case.

    bad credit business loan for cash flow helps you manage the gaps between when you must pay a vendor and when your customers pay you. Because a loan can be approved within 24 hours, and funds disbursed quickly, they are perfect for when the unexpected happens.

    A key vendor is demanding payment, you were expecting to get a check in the mail that would cover the bill and it didn’t show up. Pick up the phone and take out a bad credit business loan to preserve that important vendor relationship, and then pay it off when funds arrive as there is a good chance there will be no prepayment penalties.

    Consolidate Higher Interest Debt

    When first starting out in business you might have taken on a lot of debt to get off the ground. You could have a small business credit card, a line of credit, and a high interest-rate loan. Remembering to make all those payments can become a pain, and you could be paying too much for that capital.

    Debt consolidation is one of the best ways to use a bad credit business loan. When you consolidate debt with business loans you are rolling all the different forms of outstanding debt that you have into one loan. Doing so means that you now have one payment, rather than multiple payments, to make.

    It can also reduce your overall interest rate. Your blended interest rate is the overall rate that you are paying for all your sources of capital. While you could be paying a lower interest rate on a short-term loan, once you add its rate in with the 22% interest on your credit card you could be shocked to see your blended rate.

    When deciding to take out a bad credit business loan for debt consolidation, use an online calculator to double check that your new interest rate will be lower than your current blended interest rate. If so, a debt consolidation loan could be the right choice for your business.

    Take into account that often debt consolidation extends your payment terms. If you have a year remaining on one loan combining it into a new, debt consolidation loan could mean that you are paying on that loan for a longer time. However, the lower monthly payment could be the better choice for your business. Look into a short term business loan for consolidation purposes if this really concerns you.


    You could have the best business on the block, one that meets a major need in your community, but if no one knows that you exist it could fail. Marketing is an important part of getting your business off the ground or growing it, but it requires some investment.

    Presenting a professional appearance is more than just putting on a suit and tie; it is having a well-designed logo and business cards. An awning with your name over the door or a high-quality website can attract customers.

    When borrowing money you should always be clear on the potential return you will receive on capital. If you can get a good grasp on how much new business your marketing efforts will generate, consider taking out a loan to fund a marketing campaign.

    Physical Expansion

    Tables are full at every dinner shift in your restaurant, and the wait list is an hour long. Or, customers have asked you to start stocking alcohol in your bodega and you just got approved for a liquor license. But you need more space.

    Problems like this are the signs of a growing and successful business. But to fund your physical expansion, you need capital. Capital allows you to take on the rent for the vacant space next door, knock down walls, and build out for more seating. Or it helps you buy refrigeration cases to stock beer and wine.

    You can choose a bad credit business loan both to fund your physical expansion but also to cover the additional costs of this expansion until it starts to generate enough revenues.

    New Product Line Development

    What if you have a great idea to expand your product line and make more money, but do not have the money to fund its development? Or, you want to acquire different inventory and expand your product line that way. It is a guarantee that you will have to spend money to add more product lines before they are generating any revenue.

    Scaling up your business takes capital, and a bad credit business loan is the perfect vehicle to help you grow. Flexible payment terms of daily, weekly, bi-weekly, or monthly payments let you design a repayment plan that will not hurt your business during your growth phase.

    Payroll Management

    Payroll can be a significant expense if you have many people on staff. It is imperative to make payroll or you will lose good employees, which will in turn hurt your business. People plan on receiving a paycheck so that they can pay their bills, and even if you solve payroll problems in the future gaining the reputation of being an unreliable employer will make it harder to attract talent.

    If you anticipate having difficulties paying employees on Friday, apply for a bad credit business loan for payroll on Monday. Note that there are no application fees so if a customer does pay a large invoice on Wednesday you are not forced to take out the loan. Shield Funding also does not charge any prepayment penalties, so if you take out a loan for payroll on Friday but can pay it off on Monday you will not be penalized.

    Another loan product designed to help business owners cover day-to-day operational expenses are working capital loans. They will lend more money but you do need a higher credit score to qualify.

    Catch up On Past Due Bills

    Do you have several past due bills, and vendors are knocking down the door? Maybe you forgot to set aside sales tax and your local tax authority is demanding payment. Related to cash flow management, it is not uncommon to make mistakes when starting out and get behind on paying bills.

    New businesses, in particular, can struggle because they do not yet have a history established to guide their budgeting decisions. You may not have known that your business takes a seasonal dip in January so you didn’t set aside money from the rush in December to cover your bills.

    Rather than get further behind, think about using a bad credit business loan to catch up on past due bills. Sometimes you just need to be able to hit the “reset” button and start with a clean slate. Now that you have more experience you can make better budgeting decisions going forward and avoid this problem in the future.

    Purchase New Equipment

    It may be time to buy a new oven, or you need more equipment to fill existing orders. Whether you need new equipment for growth purposes or to maintain existing business you can use a bad credit business loan to fund equipment purchases.

    If you do not have the time to apply for an equipment financing loan, which requires supplying the lender with information on the equipment’s condition, an appraisal, and a comprehensive application, work with an alternative lender to finance your new equipment.

    Hire More Staff

    While small business owners have to develop a wide range of skills, at some point you will need expert help. Or it simply does not make sense for you to spend your time on a task.

    If you are the best salesperson in your business but you are spending all your time balancing the checkbook, hire a bookkeeper. Or, it is time to market that amazing new product but you need a top-notch salesperson.

    Borrowing capital to hire more staff can ultimately lead to increased revenues and decreased stress. If you are a start-up you may need to show a new hire that you can afford their salary for a few months while getting launched, and will need those funds in your bank account.

    Build Credit

    Sometimes you may have poor personal credit because you simply do not have enough credit. Your credit score reflects how well you manage credit. If you pay late or default on a loan it subtracts points from your score. But if you have never taken out credit the credit bureau has no information off which to base their score.

    As odd as it may sound, if you have been able to finance your small business with cash it is not a good thing in the credit world and could work against you. A simple solution is to take out debt solely for the purpose of building credit.

    Taking out a loan, even a small loan, and repaying it within a short time helps your credit score by demonstrating that you know how to manage debt. A bad credit business loan is good for this purpose because the lender will approve you for credit on the basis of your monthly revenues even if your credit score is as low as 500.

    Buy out a Business Partner

    When you first opened your business you might have had to take on a partner. Partners are great for spreading risk, investing capital into the business, or bringing their specific expertise, but these relationships can sour.

    Buying out a business partner could be because they want to retire, or you no longer share the same vision for the business, it is not always due to a bad relationship but once one party has expressed interest in exiting the business you should move quickly.

    A business partner who does not want to be running the business can hurt it by having a bad attitude around customers, or not doing a thorough job. If they have lost interest it will impact their performance, so it is best to show them the door quickly. Call up an alternative lender, take out a bad credit business loan, and politely show them the door.

    Buy Out a Business Loan

    Alternately, you may want to buy out a business. Your competitor has announced their retirement plans and you have the opportunity to scoop up their client list, equipment, and inventory at a discount. When opportunities to acquire a business that would make an excellent addition to your own arise you may need access to capital quickly.

    Every small business owner has dreams. Dreams of growth, or helping others, or being the boss of their own lives; dreams which can be realized by taking out a bad credit business loan. The best reason for you to borrow could be one or many on this list but if you are ready to apply contact Shield Funding today.