Key takeaways
- Most contractor working capital is approved on bank deposits and time in business, not on your credit score alone.
- Credit still matters. It affects your pricing and which funders will look at your file.
- Overdrafts, negative balance days, and existing advances hurt you more than a low score does.
- Thirty days of clean banking can meaningfully change the offers you get.
What funders actually look at
Banks lead with your credit score and tax returns. Most contractor funding partners start somewhere else: your business bank statements. They're trying to answer one question, which is whether your business generates enough consistent cash to comfortably carry a payment.
| What they check | Why it matters |
|---|---|
| Monthly deposits | The single biggest factor. It sets the amount you can support. |
| Time in business | Most partners want 6+ months under current ownership. |
| Average daily balance | Shows whether you can absorb a daily or weekly payment. |
| Negative days and NSFs | Frequent overdrafts are a bigger red flag than a low score. |
| Existing advances | Payments already coming out reduce what you can add. |
| Credit profile | Still reviewed. Affects pricing, term, and which partners will fund. |
| License status | An active contractor license supports your file. |
More detail in how contractors qualify for funding.
Be straight about the trade-off
Lower credit usually means a higher cost, a shorter term, or a smaller amount than someone with strong credit and two years of tax returns. Anyone who tells you otherwise is selling something.
What lower credit does not mean is that you're out of options. It means the deal has to make sense on the job. If the funding costs $12,000 and the job clears $40,000, that math can work. If it costs $12,000 and the job clears $14,000, it doesn't, and we'll tell you so.
Run it before you sign. Put the amount, the factor rate, and the job's profit into our funding calculator. If the job can't carry the cost, the answer is no, whatever your credit looks like.
Options that weigh credit less
- Approved mainly on deposits
- Fastest option, often 1–3 days
- Highest cost of the group
- Daily or weekly payments
- Leans on your customer's credit, not yours
- Good when a GC or insurer owes you
- Advance against invoices you've already earned
- Your customer may be notified
- The equipment secures the deal
- Often available with weaker credit
- For trucks, trailers, and machines
- A down payment may be required
- Payments flex with your sales
- Deposits matter most
- Helpful for seasonal trades
- Cost varies widely
Compare all of them in the complete contractor funding guide or see MCA vs. business loan.
Improve your odds in 30 days
Your last three to four months of statements are what get reviewed, so what you do this month shows up in your next file.
- Stop the overdrafts. Nothing sinks a file faster than repeated NSFs. Keep a buffer, even a small one.
- Run income through the business account. Deposits into a personal account don't count toward your business revenue.
- Keep a positive daily balance. Ending most days above zero matters more than one big deposit.
- Deposit consistently. Steady weekly deposits read better than one lump sum and three quiet weeks.
- Pay down or pay off an existing advance. Fewer payments coming out means more room for new funding.
- Keep your license current. A lapsed license can stop a file cold.
- Get your documents ready. Four months of PDF statements and a clear photo of your ID.
Watch out for these
- Upfront fees. Nobody legitimate charges you to apply or to "hold" an approval. In several states, brokers charging advance fees for commercial financing is illegal.
- Guaranteed approval. No one can guarantee funding before reviewing your statements.
- Stacking. Taking a second or third advance on top of an existing one is how contractors end up with more going out daily than coming in.
- Credit repair bundled with funding. Be cautious of anyone selling both at once.
- No written total payback. Get the amount funded, total payback, payment size and frequency, and all fees in writing before you sign.
Find out where you stand
No credit check to start, and no hard pull to see your options. We compare 15+ funding partners and tell you honestly if the numbers don't work. Free to apply, no obligation.
Bad credit funding FAQ
What credit score do I need for contractor funding?
There isn't one cutoff. Many working capital partners consider scores in the 500s when deposits are strong and the business has 6+ months of history. Higher scores generally mean better pricing and more options.
Will applying hurt my credit?
Our initial review uses a soft inquiry, which does not affect your credit score. Some funding partners may run additional inquiries later in underwriting, and you'll know before that happens.
Can I get funding with a tax lien or past bankruptcy?
Sometimes. It depends on the age, the amount, whether you're on a payment plan, and how your deposits look. Tell your specialist up front; it almost always comes up in underwriting anyway, and knowing early saves time.
Do I need collateral?
Working capital is typically unsecured, though most agreements include a UCC filing and a personal guarantee. Equipment financing is secured by the equipment itself.
What if I have an advance already?
It's still possible, but be careful. Your existing payments reduce what your deposits can support, and stacking is a common way contractors get into trouble. Sometimes the better move is paying off or consolidating first.
✓ Reviewed by the Funding Expansion contractor funding team · Last updated September 2026
Sources
- U.S. Small Business Administration, loan programs: eligibility and alternatives to consider
- California Department of Financial Protection and Innovation (DFPI): commercial financing disclosure rules
- California Secretary of State, UCC filings: search liens filed against business assets
- CSLB license lookup: confirm your license is active
General information only, not legal, tax, or financial advice. Approval, amounts, costs, and terms depend on underwriting and vary by funder. Funding Expansion is a commercial funding broker, not a lender. Funding is provided by third-party funding partners and is subject to qualification.