Business loans for bad credit guide

Compare rates and options for poor business credit histories

Loans available from £1,000 up to £20m
Loans available from £1,000 up to £20m
Multi award winning website
Multi award winning website
Some of the lowest rates available
Some of the lowest rates available

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How do I get a business loan with bad credit?

There are many times when it is essential for your business to access finance, whether you need the capital for an unexpected expense or to cover the cost of a vital purchase. However, a poor business credit rating could mean your business struggles to access the finance it desperately needs, especially through traditional forms of lending.

However, through our panel of lenders we may be able to provide the funds you need. To help you in your search for poor credit business finance, we have produced this comprehensive guide which will help you find bad credit business loans.

Why is the credit rating of my business so important?

If you have been turned down for business finance in the past, it could be due to a poor business credit score. Your score is determined by a variety of factors which are known as your capacity, character, conditions, capital and collateral. It is these characteristics which credit referencing agencies use to decide how reliable you will be at repaying any debts.

A credit score is a numeric value which indicates the credit worthiness of your business, the higher your score the higher your chances of finding a loan, overdraft or other forms of borrowing. The score is calculated by the three CRAs, Experian, Equifax and TransUnion. The CRAs each hold a report detailing your financial transactions, with details of any existing credit arrangements, payments and important information such as County Court Judgments.

If you always make payments on time and have a low debt to income ratio, you are likely to have a good score. However, changes in business finances can quickly impact the strength of your credit worthiness and your rating could decrease. If you miss repayments and your debt levels rise, your score is likely to decrease.

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Can you start a business with bad credit and no money?

It can take time for a low credit score to improve and we understand that in some situations your business will need quick access to cash. For example, if you do not have savings available there are business loans for startups which can provide the cash you need. If you are searching for a startup business loan with a poor personal financial background, there are a range of alternative lenders who specialise in providing startup business loans for all financial histories.

As part of our commitment to supporting businesses we have developed links with a variety of lenders. By partnering with both high street banks and alternative options such as online banks and peer to peer lenders, we aim to help businesses secure the finance they require.

With the rise in popularity of alternative forms of finance, an increasing number of lenders are providing tailored business loan startup options, credit cards, overdrafts and other forms of finance.

We understand that when it comes to business funding, not everything is black and white. We do our best to understand your individual situation, so that you can find the ideal solution regardless of your credit history. If you do have a bad score, you may be offered funding with a higher rate of interest, compared to a business with an excellent score. We understand that as a small business it can be difficult to compare the various terms and business loan rates available, so we have developed an innovative comparison service.

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Searching for a bad credit loan? – Compare your options

With so many alternative forms of finance available it can be difficult to know where to get the best solutions for those with bad credit. Our finance finder is designed to improve your access to business funding regardless of credit rating, by providing you with a list of lenders who meet your individual requirements.

The tool will ask a variety of questions which are designed to provide the lender with a detailed insight into your business. For example, you will be asked how much you need to borrow, what the funds will be used for and specific details about your current financial performance. Our system will then use this information to match you to finance options which are most suitable for you.

How can I get a business loan with bad credit and no collateral?

Our lenders can offer amounts starting from £1,000 to a maximum of £20,000,000, in a variety of forms. By providing your business with access to a wide range of finance options, there is an increased chance of you being approved for bad credit business loans. Our lenders can provide both traditional forms of finance and bad credit business loans. For example, your company could arrange an unsecured or secured fixed term loan, or even invoice finance.

Invoice finance solutions are a popular form of bad credit business finance, with invoice factoring being one of the most common alternatives. If the business is currently operating well and has invoices outstanding, it may be possible to use invoice factoring to access the amount owed to you early. The funding works by fast tracking your invoice payments, with the factoring company charging a fee for processing.

We can help you compare the available options, so that you can find the best form of business finance, whether you are comparing start up options or business finance for existing businesses. Before you borrow anything it is important that you compare interest rates and charges, so that you take into consideration all costs and terms associated with the finance.

How to improve (or increase) my chances of approval

The options available to those with credit issues will depend on their specific circumstances. For example, can you provide security through business or personal assets? Does your business have many financial troubles? Or, are you a start-up with no financial background? As you can see there are a range of factors which could impact your chances of approval. However, we work with lenders who do not just consider the black and white facts.

Instead, our lenders will get to know your business and take time to go through your business plan, as this will give them an insight into the potential your business has to repay the borrowed amount. One of the most important deciding factors in an application is whether you have business CCJs. The lender will want to know how many you have, their value and when you received them. If you have a CCJ, it will have a significant negative impact on your file, but if you can show that it is a historic debt which has been repaid it may not impact your application.

Lenders will look into a variety of aspects in the business’s financial performance, this will include analysing public data about the business. This information will be used to make an assumption about the value of the business and its available cash. There is a chance that this data is not accurate, so before making an application try to ensure that the public information matches your current finances as it could improve your application.

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Can I improve my credit rating?

Before applying for a loan, it is important to find out your credit score, as this could help you find which small business finance options are available for those with a poor financial history. If your business has a low credit score, the first place you will probably think of approaching for finance is a high street bank, however not many of these lenders will be able to provide funds to those with a poor financial background.

If you know that you may need business finance in the future, your chances of being approved will increase if you take steps to repair your rating. The first step should be to check your credit report, as this will help you identify where payments need to be made. You may also find that your score is hindered by errors on your report, which you can request are rectified.

Does personal bad credit affect business loans?

Depending on the type of business you operate, the lenders may also want to perform a personal credit check. The director’s performance in other businesses and the personal financial situation of those running the company can also impact the success of an application. For example, if a director has a history of running under performing businesses, it could impact the lenders trust in their abilities. However, if you run other businesses which are trading successfully, make sure the lenders are aware of this.

The best way to improve your chances of being approved for finance with a personal bad credit history is to provide security. This can be in the form of company assets, although if these are not available you could provide a personal guarantee which will be based on the value of your personal assets. For example, if you own a home or car, these could be provided as security against the business loan. However, it is important to ensure that the loan repayments are affordable, as you could lose your assets if payments are missed.

It may also be possible for another person with a good credit history to take responsibility for the loan by co-signing the agreement. This person is known as a guarantor, as they guarantee to pay any payments which you miss. A guarantor is often a friend or family member and it is important that everyone understands the implications of co-signing for the loan.

How to apply for business loans for poor credit

By using our finance finder, you will know which lenders can provide loans for your specific situation. If you have found a loan which matches your requirements, the application process is designed to be very simple. The details you enter within the finance finder tool will be passed across to the specific lender’s website, where their application will also ask for a few additional details. The complete application is designed to take less than 5 minutes and in many circumstances, you could receive the funds within 24 hours.

To speed up the application process you should have your financial documents and a comprehensive business plan ready to provide. The majority of lenders will want to examine documents such as bank statements, annual returns and cash flow forecasts, as they will provide proof to support the information you have provided.

Many lenders will also use this information to examine your finances in more detail as part of the underwriting process. By closely analysing your cash flow forecasts, the lender will be able to assess whether your business is likely to be able to afford the repayments. If you can clearly prove that your cash flow forecast shows surplus cash in the future, you will have a higher chance of approval.

Apply today for your business finance!

If you have been turned down for the loan you need, there are still options available. For example, the government and also local councils will often have grants and funds available to assist businesses. It may also be possible to arrange another form of business funding, such as an overdraft or invoice finance. If you would like to discuss your options in more detail, please contact our experienced team.

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