The availability of business loans for bad credit will depend on your specific circumstances, and whether you can provide security through business or personal assets. Whether your business has a history of financial troubles resulting in poor credit, or is a start-up with no credit history, there are a range of lenders which will not just consider the black and white facts.
Instead, some 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 a loan. This will make it possible to get a business loan with bad credit.
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 credit 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 of 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.
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 underperforming 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 business loans for bad credit is to provide security. This can be in the form of business assets, although if these are not available you could provide a personal guarantee which will be based on the value of your personal assets. It may also be possible for another person with a good credit history to take responsibility for the loan by co-signing the agreement.