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Business Loans Guide

Business Loans for Bad Credit

A guide to helping you understand and compare business loans for bad credit

A guide to business loans for 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 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 business loans for bad credit, we have produced this comprehensive guide which will help you find bad credit business loans.

Can you get a business loan with bad credit?

Your credit 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. If you always make payments on time and have a low debt to income ratio, you are likely to have a good credit rating. However, in reality changes in business finances can quickly impact the strength of your credit worthiness.

Before applying for a loan, it is important to find out your credit score, as this help you find which small business loans for bad credit are available to your business. If your business has a poor credit file, 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 poor credit histories.

Thankfully, there are a range of alternative lenders who specialise in providing business loans for bad credit. We are committed to providing businesses with access to small business loans with no credit, so they are able to grow. Our lenders include both high street banks and alternative options such as online banks and peer to peer lenders. With the rise in popularity of alternative forms of finance, an increasing number of lenders are providing tailored unsecured business loans for bad credit businesses.

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Compare business loans for bad credit

With so many alternative forms of credit available it can be difficult to know where to find the best business loans for bad credit. Our finance finder is designed to improve your access to business funding with bad credit, by providing you with a list of lenders who perfectly your 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 loans which you are pre-qualified for.

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 a loan. Our lenders can provide traditional business loans for poor credit, such as unsecured and secured fixed term loans, although we can also offer loans such as merchant cash advances and invoice finance, which are ideal loans for businesses with bad credit.

One of the most popular forms of bad credit business finance is asset finance. These loans are ideal for businesses which are cash poor but asset rich and involve providing the lender with security for the loan. There is a high chance the lender will use assets such as vehicles, property and equipment which cover the value of the loan amount. By reducing the risk to the lender, your business is more likely to be approved.

Another form of business loan for bad credit is invoice finance, which will usually take the form of invoice factoring. 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.

How can I improve the chances of my application being approved?

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.

How to apply for business loans for bad 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 application process, which will also ask for a few additional details. The complete application process 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.

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. If you would like to discuss your options in more detail, please contact our experienced team.

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