Medical Debt Back on Credit Reports: How Loan Brokers Can Help Business Owners

Business owners across America face a new financial reality. A federal judge has overturned the Consumer Financial Protection Bureau’s rule that would have removed medical debt from credit reports, potentially impacting millions of entrepreneurs’ ability to secure business financing.

This ruling arrives at a critical time when many business owners are already struggling with healthcare costs while trying to maintain operations. The decision means that unpaid medical bills will continue to appear on credit reports, directly affecting the credit scores that lenders use to evaluate loan applications.

For business owners who have been managing medical debt, this change could create significant obstacles when seeking capital for growth, equipment purchases, or day-to-day operations. However, specialized business loan brokers and alternative lenders are stepping up to provide solutions for entrepreneurs facing these credit challenges.

Understanding the Court’s Decision

U.S. District Judge Sean Jordan ruled that the CFPB exceeded its authority when it implemented the medical debt rule in January 2025. The rule would have removed an estimated $49 billion in medical bills from approximately 15 million Americans’ credit reports.

The Biden administration had argued that medical debt was not a reliable predictor of someone’s ability to repay loans. The CFPB’s research from 2014 supported this position, showing that medical debt did not effectively indicate whether borrowers would default on other types of loans.

Judge Jordan disagreed, finding that “every major substantive provision of the Medical Debt Rule” exceeded the CFPB’s jurisdiction under the Fair Credit Reporting Act. Industry groups like the Consumer Data Industry Association and Cornerstone Credit Union League had challenged the rule, arguing it would harm lenders’ ability to assess borrowers accurately.

The Impact on Business Owners

An estimated 100 million Americans carry healthcare debt, according to research by Kaiser Health News and NPR. For business owners, this debt can now directly impact their ability to secure financing for their companies.

Before the ruling, business owners with medical debt would have seen their credit scores improve by an average of 20 points once medical bills were removed from their reports. This boost could have meant the difference between loan approval and rejection for many entrepreneurs.

The ruling also affects other provisions that would have protected borrowers. Medical devices like wheelchairs and prosthetics can once again be used as collateral for loans, and lenders may repossess these items if patients cannot repay their debts.

How Business Loan Brokers Can Bridge the Gap

Despite these challenges, business owners with medical debt still have options for securing financing. Specialized business loan brokers understand that medical debt doesn’t reflect an entrepreneur’s business acumen or their company’s potential for success.

Alternative lenders have developed products specifically designed for business owners who may not qualify for traditional bank loans due to credit issues. These lenders focus on business performance metrics rather than solely relying on personal credit scores.

The ARF Financial Solution

Companies like ARF Financial have recognized this need and created loan products with more accessible qualification requirements. Their Bankroll Revolving Line of Credit serves as an example of how alternative lenders are adapting to help business owners navigate credit challenges.

ARF Financial’s program requires a minimum credit score of just 575, significantly lower than traditional bank requirements. This threshold makes their financing accessible to business owners whose credit scores may have been impacted by medical debt.

The Bankroll product offers several features that make it particularly suitable for business owners dealing with credit challenges:

• Flexible access: Business owners can access up to $1,000,000 through a revolving line of credit
• Extended terms: Repayment terms extend up to 36 months with fixed weekly payments
• Unlimited draws: During the revolving period, business owners can make unlimited draws of $5,000 or more
• No prepayment penalties: Business owners can pay off their loans early without additional fees

Alternative Financing Strategies

Business owners facing medical debt-related credit challenges should consider several strategies when seeking financing:

Focus on Business Performance

Many alternative lenders prioritize business performance over personal credit scores. Strong revenue, consistent cash flow, and business growth trends can outweigh credit concerns in the underwriting process.

Consider Revolving Credit Lines

Revolving credit lines provide flexibility that traditional term loans cannot match. Business owners can access funds as needed and only pay interest on the amount they use, making it easier to manage cash flow while addressing both business needs and medical expenses.

Work with Specialized Brokers

Business loan brokers who specialize in working with entrepreneurs facing credit challenges understand which lenders are most likely to approve applications. They can match business owners with appropriate lenders and help structure applications to maximize approval chances.

Explore Industry-Specific Lenders

Some lenders specialize in particular industries and may have more flexible credit requirements for businesses in sectors they understand well. These lenders often consider industry-specific factors that traditional banks might overlook.

The Broader Context

The court’s decision reflects ongoing tensions between consumer protection and lending industry concerns. While consumer advocates argue that medical debt unfairly penalizes people for health issues beyond their control, industry groups maintain that this information helps lenders make informed decisions.

More than a dozen states have introduced their own laws to keep medical debt from affecting consumers’ credit, but the federal landscape remains complex and evolving.

Taking Action Despite the Challenges

Business owners should not let medical debt derail their entrepreneurial goals. The key is understanding that while traditional bank lending may be more challenging, alternative financing options continue to expand.

The success of companies like ARF Financial demonstrates that lenders recognize the distinction between medical debt and business creditworthiness. By working with brokers who understand these nuances, business owners can access the capital they need to grow their companies.

Business owners facing credit challenges should also consider improving their overall financial profile by maintaining strong business bank account activity, reducing other debts where possible, and documenting their business’s positive performance metrics.

Moving Forward with Confidence

The overturning of the medical debt rule represents a setback for many business owners, but it doesn’t spell the end of financing opportunities. Alternative lenders and specialized business loan brokers have created products and services specifically designed to help entrepreneurs overcome credit obstacles.

Companies like ARF Financial, with their 575 minimum credit score requirement and flexible terms, demonstrate that the lending industry is evolving to meet the needs of business owners who may have been excluded from traditional financing channels.

Business owners dealing with medical debt should focus on finding the right lending partner rather than assuming they cannot qualify for financing. With the right approach and the right lender, entrepreneurs can still access the capital they need to build and grow successful businesses, regardless of their medical debt situation.

The key is to work with experienced business loan brokers who understand both the challenges and the opportunities in the current lending environment. These professionals can help business owners navigate the complex world of alternative financing and find solutions that work for their specific situations.