Getting A Business Loan With Bad Credit


Just because you've had problems with credit in the past doesn't mean that the door is completely shut when it comes to sourcing finance for your business in the future.

Although you may find it harder to get finance through high street banks and building societies, Capitalise can help to match your credit history and business type with lenders who specialise in bad credit business loans.

Whether you're a startup looking to raise capital to launch your new venture or are simply looking to plug a cash flow gap in your existing business, there are plenty of alternative and independent lending streams available.

Read on to learn more about the options at your disposal as well as picking up some helpful tips on how you can boost your chances of securing finance in the future.

tip one

Discover Independent Lenders

Many new and existing business owners often give up their search for finance after exhausting traditional borrowing options through high street banks and building societies. Not only can it be disheartening when a bank turns you down for finance, but it can also potentially impact your consumer credit file.

With Capitalise, you can choose from a huge selection of business financing options from more than 70 trusted lenders, many of which are independent and specialise in issuing bad credit business loans within your industry.

The 'computer says no' attitude taken by many mainstream lenders immediately puts those with bad credit at a major disadvantage. Independent lenders tend to be more flexible when assessing risk and will take things into account such as your projected revenue, business plan and previous business successes. 

tip two

Use A Watertight Business Plan To Your Advantage

Your company’s financial history will be the main go to point for lenders as they’ll want to see that you have the necessary cash flow to repay the borrowed capital, however, for startups in particular, this isn’t always possible.

Startups won't have any revenue history to help support their application, but will instead be able to show accurate financial projections to prove that repayments can be made.

Business plans are often forgotten about beyond the opening few years of trading but by keeping your numbers up to date as your business grows, it can be equally helpful when trying to secure borrowing with a less than perfect credit score.

The Capitalise platform allows you to upload these documents to help support your application as well as letting you add your company accountant to add weight to the application process. 

tip 3

Secure Borrowing On Your Assets

Unsecured business loans rely almost exclusively on your credit score and business income when making a final lending decision which isn't ideal if you've had credit problems in the past.

Securing finance against a business asset or premises will give lenders far more security in the unlikely event that you're unable to make repayments on time. With less at stake for the lenders, your chances of acceptance will greatly increase while the interest rates on offer are likely to be far lower to reflect the reduced risk.

If you're looking to use your new loan to purchase additional assets such as tools, vehicles, computer hardware or other essential business equipment then consider asset finance as a potential solution. Money is lent over the economic life of the asset and Capitalise can help you to find lenders who specialise in hire purchase, leasing and refinancing options. 

tip 4

Apply For Lower Amounts

Any funding application made to a lender is assessed on the risk it represents to the lender. The more you're looking to borrow, the more stringent they're likely to be when it comes to assessing your circumstances.

Before you make any credit application, it's essential that you work out an honest and accurate budget, taking into account exactly what you need and not a penny more. By reducing the amount that you apply for, lenders are likely to be more lenient when it comes to taking additional supporting documents, such as your business plan and company accounts, into consideration.


Improve Your Credit Score For Future Borrowings

Remember that a bad credit score is very much fixable and by making timely repayments on your finance agreement you'll start to see it improve over time. This will make it far easier for you to source better interest rates and larger borrowing amounts in the future, plus any long term bad credit loans that you've taken out could be refinanced to help secure more beneficial repayments.

At Capitalise, we're constantly updating and improving our aggregation platform to continually bring our customers the best deals available. If you notice a positive upturn in your credit score, it's well worth checking back to review your finance agreements, helping you to always ensure that you have the most cost effective deal in place.