Although a poor credit history might prevent you from securing a traditional funding agreement, it doesn’t necessarily limit your options and it is still possible to get the finance you need. If your business has a bad credit rating because of a CCJ, history of late repayments or non-repayment of an outstanding debt, it is likely you’ll be turned away by most high street banks. However, depending on your circumstances, a host of alternative finance providers could loan you the funds you need to grow your business.Business loans from our alternative lending partners are becoming increasingly popular because many companies can source a much-needed boost to their cashflow despite their credit score. This is because modern lending no longer relies on credit history alone; current performance factors, such as monthly turnover, reputation and ratings are considered to accurately assess a company’s growth potential and ability to repay the loan. If your credit file displays a history of poor credit management but your current business venture has huge potential for growth, an alternative finance arrangement could be tailored to your needs.
With alternative funding products, such as a merchant cash advance or a secured business loan, business owners with a poor credit history won’t be heavily penalised. Alternative business finance can be secured business loans or unsecured business loans. Terms are transparent and tailored to suit the needs of your business so you won’t get hit by any nasty surprises.
You may be required to use a high value asset as security against your loan. Alternatively, a percentage of future card transactions may be taken as a form of repayment.
Depending on your current circumstances, a range of products could be tailored to suit the needs of your business. Here are some of the most common arrangements:
If you accept credit and debit card payments, you could qualify for a quick and flexible merchant cash advance, also known as a business cash advance. A percentage of future card transactions is taken as payment for the loan, which is generally settled within twelve months.
A secured business loan requires an asset as security against the loan. If you are not able to fulfil the terms of the arrangement, the lender will seize the asset as a form of repayment.
As a secured form of lending, asset finance enables you to release equity in existing assets or hire new collateral, such as equipment or vehicles, with the option of buying them at the end of the agreement.
Factoring is an asset-backed funding solution. It enables you to sell your invoices to a factoring company for a fee. A percentage of the value of the invoice will be advanced to you before it is settled by your customer.
If your poor credit file is preventing you from growing your business, we can help. There are many options available to businesses, regardless of credit history. Complete our online application and we will help find the right source of funding for your business, tailored to suit you and your situation.
To be considered for a business loan with a bad credit rating, you must operate a UK-registered business that has at least two years’ trading history. You may be required to demonstrate month-on-month growth. In some cases, you may be required to offer a personal asset as security against the loan.