Business loans for bad credit scores

A bad credit rating can make it difficult to get traditional finance – but there are many funding solutions available which mean you can still get the funds you need to grow your small business. We have products that your business can benefit from even if it has an adverse credit history.


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If you have a poor credit history or a bad credit rating, whether business or personal, you may struggle to secure a business loan from a bank or other conventional finance provider, that’s because a bank will see you as too high a risk to lend to. However, there are a number of options available, so it is still possible to get the finance your business needs to grow.

Even if you personally or your business has a bad credit rating because of a county court judgement (CCJ), history of late credit card or loan repayments or even non-repayment of outstanding debt, it’s still possible – depending on your circumstances – to obtain funding from business finance providers. This is regardless of whether you are a sole trader, a start-up or a limited company.

What is a bad credit business loan?

Bad credit business loans are a type of business funding that’s intended 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 poor credit history?

Yes, depending on your circumstances and how willing you are to use other forms of security than a typical bank would need.

Business finance providers use different underwriting techniques to banks. This can include looking at your business’ sales, turnover and profit, reviews and testimonials, reputation and even your social media profiles. They will also use big data and modern data modelling techniques to assess your credit risk, the potential for growth, and your ability to repay any loans. Even if your business has fluctuations in sales or negative cash situations it is a very ordinary scenario for many businesses. Do not be put off from applying even if your business has been underperforming.

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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 with 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, do not let it stop you applying for funding.

These techniques and the fact that they look at a wider range of factors gives 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.

For these reasons, online business loans are an increasingly popular way for UK businesses to obtain funding. They give businesses, and especially small businesses, a cash-flow injection which stimulates growth.

Debt advice: Business Debtline is a charity run by the Money Advice Trust. They offer free debt advice for the self-employed and small businesses in England, Wales and Scotland.

There are also UK government funding schemes or grants for your business depending on region and accessibility. Applying for such schemes and grants can, on occasion, be a timely affair with lots of administrative paperwork to process and certain criteria to be met to become eligible.

If you have a bad credit score either personally or through your business, we would also advise talking to the right financial specialist. For any personal debt, advice visit the Money Helper. For specialist business debt advice you can visit Business Debtline.

Retail store owner who has used a bad credit business loan

What is the minimum credit score for a business loan?

It goes without saying that the minimum credit score your business must have to obtain funding depends on the lender and type of loan product you apply for. As mentioned, each lender has their own requirements and there are different underwriting techniques that help bad credit loan providers see the bigger picture of your business.

Whilst banks and credit unions typically require minimum credit scores of 700, online lenders are able to offer far fewer credit requirements, making it easier to access finance via alternative finance providers.

What type of business finance can I get if I have a bad credit rating?

If you have a poor credit history or no credit score at all and need a business loan, applying for business finance is the quickest and easiest way to get access to funds. Alternative business finance can include merchant cash advances, secured or unsecured business loans, or asset finance.

If you have a bad credit score or a poor credit file, there is a range of business loan options that can be tailored to suit your business’ needs. These include:

Merchant Cash Advance

Businesses who take credit and debit card payments can be eligible for a merchant cash advance. This is also known as a business cash advance and is a fast and flexible business loan arrangement. The way it works is simple. Over a period of time, typically 12 months, the lender will take a percentage of card transactions as payment for the loan.

Secured Business Loan

A secured business loan is when a commercial asset such as property or equipment can be secured against the business loan or used as a guarantee. This can be a high-value loan of up to £2 million. If you miss repayments on a secured business loan, the asset it is secured against will be seized as a form of repayment.

Unsecured Business Loan

An unsecured business loan does not require the security or guarantee of a commercial asset. It is a fast and easy way to receive an upfront injection of cash into your business. You would normally make loan repayments every month or quarter during a set period.

Asset Finance

Asset finance is another secured form of funding. If you have a high-value asset such as vehicles or machinery, you can get a business loan against the value of this asset which allows you to release its equity. You also have the option of buying the asset back at the end of the loan period.

Invoice Finance

Invoice financing, also known as factoring, means that you are effectively selling your invoices to a lender for a fee. The lending provider will give you a percentage of the value before your customer pays the invoice.

Turnover Loan

Have you had credit score issues in the past which mean you cannot get funding even if you have a good credit score now? Lenders can provide business loans to companies with a current healthy turnover and a strong credit rating, even if there is a history of bad credit.

You can apply for business finance whether you personally or your business has a poor credit score, and even if you have a bad director’s history.

Remember: Improving your business credit score can give you access to a wider choice of business funding. Learn more on how to improve your business credit score here.

Can I get a business start up loan with bad credit?

Startup business loans for bad credit are difficult to obtain, but not impossible. Lenders that offer these products tend to charge high interest rates to mitigate risky lending 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.

The benefits of alternative finance providers

Non-bank finance provides a range of benefits to companies over traditional funding lines. Not only is it possible to get a business loan if you have a bad credit rating, but alternative finance means:

  • Loans are tailor-made to suit the needs of your business.
  • They are flexible and affordable, normally with short-term repayment times so you are not making payments for long.
  • You will receive your money quickly. Applications are agreed and the funds are provided swiftly, normally within a matter of days. This is especially beneficial if you need an emergency loan.
  • They do not register on your credit report, so you are free to seek other funding opportunities.
  • Less paperwork - you do not need to provide business plans or complex financial records.
  • The terms associated with this type of business finance are transparent – there will not be any unexpected fees.

Business man and woman making a business loan for bad credit application

Does my business qualify for a bad credit business loan?

If you need a business loan but have a poor credit score, you need to meet certain criteria to be eligible to receive funding. Your business must be registered in the UK, and you must be able to show at least two years’ worth of trading.

It does not matter what type of business you run; you could be a sole trader, a start-up or a limited company.

Depending on the type of business finance you are applying for, you may also need to show solid growth, or offer a commercial or personal asset as security against the loan.

How do I get a business loan with bad credit?

If you’re interested in applying for a business loan with bad credit, then we are on hand to help. In order to get a bad credit business loan, simply follow these steps:

  • 1. Check your business’s credit score to find out its current financial status.
  • 2. Make sure you don’t have any outstanding debts, and decide whether your business can afford to borrow at this time.
  • 3. Research your options to get an idea of what’s available for your business.
  • 4. Complete our easy online application where we will ask for details about your business and how much funding it requires.
  • 5. Wait to hear back from us, we will provide you with funding quotes that are tailored to your business’s credit situation. Don’t worry, this won’t impact your credit rating.
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Do I need to provide security or a guarantee?

Depending on the type of business loan you are applying for, it may be necessary for you to use a high-value asset as security or a guarantee.

As these business new forms of borrowing become increasingly popular, so providers are finding more creative ways of accepting different forms of security, especially as these types of business loans are offered on a tailor-made basis.

Are business finance providers regulated by the FCA?

The short answer is not all of them. That means you should do your research to ensure that you are getting the safest and best financing possible for you. Many business finance lenders are regulated by the Financial Conduct Authority (FCA), and at Capalona we are regulated by this body as well.

All of the lenders we work with adhere to best financial industry practices and many of are regulated by the FCA. They may also be members of trade associations such as the National Association of Commercial Finance Brokers (NACFB).

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."

Chloe Mckenna - Finance Specialist

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