Business Loans For Bad Credit
A bad credit rating can make it difficult to get a business loan. But there are many funding solutions available, so you can still get the funds you need to grow your small business. We work with a wide range of lenders, so even if you have an adverse credit history, we can help you find finance.
- Compare a wide range of lenders and rates
- Check your eligibility in minutes
- Find out how much you could borrow
It's fast, free and won't affect your credit score
- What is a bad credit business loan?
- Can I get a business loan if I have bad credit?
- What is considered to be a bad credit rating in the UK?
- How do I apply for a business loan with bad credit?
- Loan options for businesses with bad credit
- Can I get a business start up loan with bad credit?
- Can I get an unsecured business loan with bad credit?
- Can I get a business loan with bad personal credit?
- Key considerations before applying for a bad credit business loan
- Should I apply for a bad credit loan?
- Bad Credit Business Loan FAQs
If you have a bad credit rating or poor credit history, whether business or personal, you may struggle to secure a business loan from a bank or other conventional finance provider. That’s because, in the bank’s eyes, you’re high risk to lend to.
But there’s good news — there are plenty of business finance options available to grow your business regardless of credit history. Even if your bad credit rating is because of a county court judgement (CCJ), late credit card or loan repayments, or even non-repayment of outstanding debt.
Whether you’re an established business recovering from defaults or a startup with limited trading history, there’s finance out there for you. Let us help you find it.
What is a bad credit business loan?
A bad credit business loan is business finance designed for companies with poor credit. A small business with an adverse credit history will struggle to secure finance because of the high risk it poses to lenders.
Business loans for bad credit work to reduce this risk and improve access to funding for all UK businesses.
Can I get a business loan if I have bad credit?
Yes, you can apply for a business loan if you have bad credit. It’s worth noting that your options will be more limited, but we work with a variety of lenders who assess loan applications on a case-by-case basis.
Finance providers may also look into the following factors:
Any business County Court Judgements - Lenders may look at how many you have received and the frequency. Don’t let a CCJ put you off from applying; you may well be surprised by the positive outcome.
Winding-up Order - A business winding-up order is issued by a court and forces an insolvent company into compulsory liquidation. The court appoints Official Receivers to liquidate all the business assets in order to repay creditors. If you have a historic winding-up order on file, don’t let it stop you from applying for funding.
These techniques and the fact that they look at a wider range of factors give lending providers a better overall picture of your business. This means that they are much more likely to approve a business loan than simply by looking at your credit history and credit score.
What is considered to be a bad credit rating in the UK?
Business credit scores are usually measured on a scale of 0-100. Credit reference agency Experian categorises low-risk borrowers as having a business credit score of 80-100, medium-risk borrowers between 50-79, and high-risk borrowers between 1-49.
The minimum credit score lenders are willing to accept will depend on the lender’s criteria and the loan type you apply for. Alternative lenders can offer fewer credit requirements than traditional lenders, which makes lending far more accessible for businesses with adverse credit.
How lenders assess bad credit applications
When assessing bad credit applications, alternative lenders don’t just base their lending decisions on your previous credit history. Unlike traditional lenders, they look closely at your real-time cash flow and check that you can comfortably make loan repayments.
Alternative lenders consider the context of your credit history, too. So, instead of just looking at your credit score and making a decision, they’ll make a note of whether CCJs are satisfied and look for available security.
Many businesses deal with sales fluctuations or negative cash situations, so don’t let previous bad credit history put you off from applying.
Reasons why you could have bad credit
- You’ve missed repayments. Failure to repay previous loans on time can negatively affect your credit score. And it’s not just loan repayments that are impacted; think bills and credit card balances, too.
- Credit report errors. It’s worth regularly checking your credit report to ensure there are no errors causing your credit score to plummet.
- Legal problems. If you have County Court Judgements (CCJs) against your small business, this can severely affect your credit score.
- Bankruptcy. If you’re declared bankrupt, this can remain on your credit file for up to six years, so it will be visible to lenders when they run credit reports.
- Multiple lines of credit. Having many credit accounts open can negatively affect your credit score. Because each time you apply for credit, it’s recorded in your credit file, which lenders can see. Lenders might see this as an indicator that you have a lot of debt.
How do I apply for a business loan with bad credit?
In order to get a bad credit business loan, simply follow these steps:
- Check your business’s credit score to find out its current financial status.
- Make sure you're not taking on too much debt, and decide whether your business can afford to borrow at this time.
- Research your options to get an idea of what’s available for your business.
- Complete our easy online application, where we will ask for details about your business and how much funding you require.
- We will provide you with your funding options that are suited to your business. Don’t worry, this won’t impact your credit rating.
Loan options for businesses with bad credit
There are plenty of business loan options if you have bad credit. Here are some to consider:
| Loan type | Bad credit friendly? | Why it works for bad credit | What you need for a quick application | How much could you borrow? | Key comparison factors |
|---|---|---|---|---|---|
| Merchant cash advance | Yes | Approval is based on your card sales volume, not your credit score. | Last 3-6 months of card processing statements and Open Banking access. | £5,000 - £500,000 | Repayments are a fixed percentage of sales. |
| Invoice finance | Yes | Lenders are more concerned about your customers’ creditworthiness than yours. | Up-to-date sales ledger and copies of outstanding B2B invoices. | Up to 95% of the unpaid invoice value | Releases up to 95% of your unpaid invoice value almost immediately, and avoids taking on new debt. |
| Secured business loan | Yes | Lenders aren’t as fussed with your credit score, as you have an asset which lessens their risk. | Proof of asset ownership, 3-6 months of business bank statements, and a recent asset valuation. | £5,000 - £2,000,000+ | Borrow more money and access lower interest risks, but you’re risking an asset. |
| Asset finance | Yes | The asset you’re buying acts as collateral. | A quote for the asset and 3 months of business bank statements. | £5,000 - £500,000+ | Makes buying expensive equipment more cost-effective, but the lender owns the asset until you make the final payment. |
| Unsecured loan | Sometimes | These loans are harder to get with poor credit. But you can lessen the risk by having a director sign a personal guarantee. | 3-6 months of bank statements, latest accounts, and a signed personal guarantee. | £1,000 - £500,000 | Quick approval and funds within 24-48 hours, but higher interest rates. |
Merchant Cash Advance
If you process customer card payments and turnover at least £2,500 each month, you could be eligible for a merchant cash advance. Perfect for businesses with seasonal sale fluctuations or businesses that don’t want to repay a fixed amount each month.
Invoice Finance
Invoice finance is where you use unpaid invoices as collateral, and the lender releases up to 95% of the unpaid invoice value. This improves cash flow without taking on traditional debt.
Secured Business Loan
If you have high-value assets, you can apply for a secured business loan. Access higher loan amounts, more competitive interest rates, and longer repayment periods with these loans. A great option for bad credit, as the lender is taking on less risk.
Asset Finance
You can use asset finance in two ways.
- If you have a high-value asset, you can get a business loan against the value of the asset, so you can release its equity.
- Or you can use the asset you’re purchasing as collateral to lend money to purchase it.
Both are good options for those with bad credit, as the lender is more interested in the value of the asset rather than your credit history.
Unsecured Business Loan
An unsecured loan is a quick and easy way to get your hands on the funds your business needs, without risking an asset. But lenders might require you to sign a personal guarantee, particularly if you have bad credit.
Note: Regardless of which loan type you apply for, the lender will always run a credit check to ensure you can afford loan repayments.
Can I get a business start up loan with bad credit?
Startup business loans for bad credit are difficult to get, but not impossible. Lenders offering these products tend to charge high interest rates to mitigate the risk associated with borrowers' profiles. Your startup will already need to be generating steady income, and you will be asked to sign a personal guarantee.
Generally speaking, it is easier to secure small business loans for bad credit if your company has been trading for 3 - 5 years or more. This is because your business is more established at this point and has survived the initial challenges that startups face.
Can I get an unsecured business loan with bad credit?
Yes, you can get an unsecured business loan with bad credit. Although these loans are typically harder to obtain with poor credit, it’s not impossible. Lenders can ask a director to sign a personal guarantee, making the director liable to repay the loan should the business be unable to.
What our experts say
"If your business has an adverse or limited credit history, then it can be hard to source finance. We work with various lenders who specialise in helping businesses like yours secure the funding you need."
Can I get a business loan with bad personal credit?
Yes, you can get a business loan with bad personal credit. Although your options may be limited, i.e. you might not qualify with mainstream lenders like banks, you will find alternative lenders are more flexible with their lending criteria.
If you own a limited company, they might only be interested in your business credit score, rather than your personal one, as you are a separate legal entity from your business. If, however, you’re a startup with virtually no trading history and, therefore, no business credit score or a poor credit score, the lender might want to check your personal credit score.
Key considerations before applying for a bad credit business loan
Before signing on the dotted line, consider the following:
- Check it’s affordable. Use our free business loan calculator to get a rough idea of the loan's total cost. It’s not just the loan amount you repay, it’s all the associated costs, including interest.
- Do you want to/can you offer security? Consider whether you’re prepared to offer security. Understand the implications of doing so, good and bad.
- Will you sign a personal guarantee? If the lender asks you to sign one, are you willing to do so? Understand what this means for your personal assets and financial situation if you have to repay.
- Limit your applications. Try not to submit multiple loan applications in a short timeframe; too many credit checks can further damage your credit score. If you’re denied finance, consider alternative routes to funding like a family and friends loan or crowdfunding, or, if you really want a business loan, look to improve your credit score before re-applying.
Pros of a bad credit business loan
- Build a better credit score.
Taking out a loan and repaying it on time can help you build a better credit score. - Grow your business quickly.
Accessing business finance gives you the working capital needed to invest in your business. - Flexible and affordable repayments.
Our alternative lenders have much more flexible lending criteria, making funding more accessible than it’s ever been. And with loan products tailored to specific business circumstances means repayments are affordable, too.
Cons of a bad credit business loan
- Higher interest rates.
As you pose a higher risk to lenders, you can expect to pay higher interest rates. - Lower loan amounts.
You might not be able to access as high loan amounts if you have adverse credit. - Personal guarantee.
You may have to sign a personal guarantee to reduce the lender's risk. This means that should the business default on loan repayments, you become personally liable for the debt.
Should I apply for a bad credit loan?
As long as you can repay the loan in line with your loan agreement, there is no reason why you shouldn’t apply for a bad credit loan.
If you qualify for other types of loans, such as a secured business loan, you could unlock more competitive interest rates, higher loan amounts, and longer repayment periods. So, it’s always worth comparing loan types you’re eligible for before making a final decision.
You can compare business loans for bad credit for free using our business loan comparison tool. See eligible loans in seconds. Compare bad credit business loans.
Bad Credit Business Loan FAQs
Having a CCJ or a winding-up order can make accessing business finance tricky, although it’s not impossible. We work with a wide range of UK lenders, and their criteria are flexible, catering to different business needs. As alternative lenders, they look at your current turnover and your business potential rather than focusing on past credit mistakes. Note that a satisfied CCJ is much easier to fund than an active one.
Adverse credit is another term for bad credit. It’s where your credit file contains negative markers, these are from missed or late payments, bankruptcies and CCJs. All these markers can suggest you’re a high-risk borrower. That’s why applying for a bad-credit-specific loan can be useful.
You need to prove to lenders that you are reliable and trustworthy with money. You can make easy adjustments to start with:
- Pay your creditors on time
- Check your credit report to ensure no outdated information
- File your accounts on time
More ways you can improve your business credit score.
The differences between soft and hard credit checks are:
A soft check doesn’t affect your credit score, as it isn’t visible to other lenders.
A hard check is what lenders perform to deep dive into your credit history when applying for a loan. These are recorded on your file and can temporarily lower your credit score. (You want to avoid having too many of these performed.)
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