Been turned down for a loan because of bad credit? A poor credit score can make accessing funding difficult.
But the good news is, there are options available. These loans cater to business owners who have low credit scores but still need access to capital to run or grow their business.
A bad business credit score is a very low credit score that indicates your business may struggle to repay debt on time and in full. This score reflects your past payment performance, including the amount, frequency, and speed of repayment. When banks, lenders, and suppliers review your credit, a low score can make your business appear risky, affecting terms with suppliers and access to funding.
Although you may find it harder to get finance through high street banks, we can help to match your credit and business with lenders who specialise in bad credit business loans. These loans are tailored to help companies with less-than-perfect credit scores secure the funding they need.
If your business currently has a low credit score, try the following to reduce any harm to your rating:
Even if your business credit score is lower than you expected, there are likely still options available to your business. Whether you're looking for a short-term loan to cover an unexpected bill, or needing a cash injection, we're here to help.
To qualify for a bad credit business loan, lenders will typically look at factors like your business's operational history, your cash flow consistency, and your future financial projections. Providing security, such as property or high value equipment, can significantly enhance your chances of approval. If you operate as a B2B company, then you may even be able to use your invoices as security for the loan. This security helps mitigate the risk to lenders, making it easier for them to provide the financing you need.
Business finance lenders often have different underwriting techniques, but all will be looking and investigating a wide range of factors to help give them an overall picture of your business. This includes looking at:
Fast, flexible business loans for businesses who take credit or debit card payments
Use assets to secure against a loan to better access to funding or more attractive terms
Easy, fast business loans with no requirement of security or guarantee
If you've had problems with credit in the past, it doesn't mean that the door is completely shut when it comes to securing finance for your business. Although you may find it harder to get finance through high street banks and building societies, alternative lenders may be able to help.
Capitalise can help to match your business with lenders who specialise in bad credit business loans. Working with 100+ UK lenders, we are ideally positioned to give you access to the whole market, so that you can find an option that’s right for your business.
The short answer is yes, it’s still possible to access small business loans with bad credit.
In truth, you may find it harder to get finance through high street banks and building societies. The good news is that there are plenty of lenders out there who specialise in business loans for bad credit. Independent lenders, for example, tend to be more flexible when assessing your application for funding. They look beyond just your credit profile at things like your projected revenue, business plan and previous business successes.
If you’re a startup, your ‘bad’ credit profile likely comes from not having a long credit history – rather than having had problems with credit in the past. Without a revenue history to support your business loan application, you’ll need to show accurate projections to prove that you’ll be able to keep up with repayments. Another way to strengthen your application is to supply a thorough and up-to-date business plan.
You might have heard business loans referred to as ‘secured’ or ‘unsecured’ in the past. Business loans for bad credit will almost always be secured. What this means is that your business loan is backed by something valuable, your business assets or premises for example. Put simply, you agree to give the lender those assets or premises in the unlikely event that you can’t repay the loan.
If you have bad credit and you’re looking for a loan specifically to buy a piece of machinery, vehicle or even computer equipment, it could be worth considering asset finance. This is a funding option where a lender will essentially purchase the asset on your behalf. Then you’ll spread the cost over affordable monthly repayments. Or you can simply lease the asset for as long as you need it.
Start by finding out what factors are having a negative impact on your credit profile. Are they things you can control? This is a great conversation to have with your accountant. They can help you unpack the contributing factors and put a plan in place for how to start improving your bad credit profile. They may suggest:
Keep in mind that making these changes will have a positive, but gradual, impact on your credit profile. You may have to wait a while to see meaningful improvement. If you’re looking for funding, the good news is that you might still be able to access small business loans with bad credit. In fact, some independent lenders specialise in business loans for bad credit by taking a more flexible and understanding approach. Make sure you provide evidence of previous business success, projected revenue and a thorough business plan to support your application.
If a bad credit profile is holding your business back, it might be worth considering Credit Improvement. This is a service you can use to increase your business credit score. A Credit Improvement company will take a look at your credit profile and let you know what level of improvement is possible upfront. Find out from the outset whether you’ll be charged a fee regardless of the result or whether they offer a no-win-no-fee service.
If you’re looking to improve bad credit, there are a number of options available. Simply understanding what goes into your credit profile is the first step to improving it. When you identify the factors that are having a negative impact, you can face them head on.
A big part of your credit profile is your business credit score. If yours is low, then that’s a great place to start. The exact factors impacting your score will be specific to your business but here are some general strategies to try:
Of course, some aspects of your credit profile are out of your control – the age of your business for example. Others, while still tricky to change, might have a little more wiggle room. You may not be able to help the years of experience your directors have under their belts but you can look at steadily appointing new directors over time. This shows healthy growth in your business. Simply making sure that your director information is complete and up to date will have a positive impact on your profile.
It’s important to remember that your credit profile was built over a long period of time, so these strategies will have a gradual, rather than immediate, effect. If improving your credit profile is fairly urgent, perhaps because bad credit is holding your business back, you may be better off speaking to a Credit Improvement specialist. Credit Improvement specialists will work directly with the main credit rating agencies to improve your business credit score. Often the service doesn’t carry any fees unless the process is successful. If you’re unsure, speak to your accountant who may be able to connect you with a specialist or begin the process on your behalf.
There are several factors that go into your business credit profile. The one you might be most familiar with is your business credit score. Our credit agency partner, Experian, uses the Commercial Delphi Score from 0 (the highest risk) to 100 (the lowest risk).
Other factors that go into your credit profile include your annual accounts filed with Companies House as well as general information on your annual confirmation statement. Your credit profile will also take into account public information about your board of directors and a review of their past and present business activities. Public records such as any legal notices registered against your business will also be factored in as well as your payment performance.
Of course the goal is to have a good business credit profile but things don’t always go to plan. There are things you can do to improve a bad credit profile, from small changes like building healthy habits to working with a credit improvement agency. It’s also important to remember that there are lenders out there that have specifically designed business loans for bad credit, so funding your ambitions is still possible.
When a lender is assessing your application, essentially they’re trying to determine whether or not your business would be able to pay back any money you borrow. In other words, how much of a risk is it to offer your business a loan?
One of the key things that lenders look at to make their decision is your business credit score. The higher your score, the more likely it is that your business can keep up with the repayments on a loan. A lender will feel more comfortable offering your business a loan if they believe the risk of you not paying it back is relatively low.
Your business credit score is one part of a wider credit profile that lenders will take into account. Some of the factors they’ll be looking out for in your credit profile include your consistently filed annual accounts, good payment performance and no outstanding County Court Judgements.
Lenders will also look at the age of your business. A trading history of two years or more gives a lender a good sense of your ability to repay any money they lend to your business. They’ll also be interested in the sector your business operates in because some are considered lower risk than others.
When you apply for a business loan, a lender will want to know about any other debt or credit facilities that your business already has. That’s not to say that you can’t get a business loan if you already have another kind of funding. But a lender will consider whether or not your business can afford to take on more debt.
You can improve your chances of being approved for a business loan by taking the time to provide a well thought out application. A detailed business plan, for example, that clearly shows how you’ll use the loan can go a long way to strengthening your application. Especially if you have a young business with a shorter track record to rely on.
Applying for a business loan can feel overwhelming and you want to make sure that you get things right. It can be helpful to lean on your accountant to support you during the process, to answer questions and provide sound advice. Depending on the firm your business works with, your accountant may even be able to apply on your behalf. There’s no harm in asking!
It’s understandable that owners might worry about being able to access small business loans with bad credit. But understanding the factors that go into a so-called bad credit profile is the first step to improving your credit.
A low business credit score will have a negative impact on your business credit profile. The higher your credit score, the less of a risk lenders will see it to offer you a business loan. For example, a score of 2 to 15 is considered very high risk while 81 to 90 is seen as very low risk.
Filing your annual accounts late or inconsistently contributes to a bad credit profile, as does a weak balance sheet and having more debt than equity. Credit agencies will also consider the age, industry and location of your business as well as your annual confirmation statement. Other factors that contribute to a bad credit profile include registered Gazette notices or County Court Judgements against your business as well as poor payment performance.
Having an inexperienced board of directors can negatively affect your business credit profile. Their past and present business activities might also be contributing factors. Simply making sure your director information is complete and uptodate can actually help your business avoid a bad credit profile.
Yes, it’s still possible to get a business credit card with bad credit. In-fact, credit cards are a great solution for businesses with low credit scores. They can help you:
Build your business credit history when you pay on time every month
Cover short-term cashflow issues
Separate your business and personal spending
Get rewards and perks from your provider
Yet, it’s no secret that when applying for a business credit card with a low credit score, you may find your options are more limited than businesses with a good credit score. That’s why we work with Capital on Tap, who look at your business and credit history for eligibility and let you know in an instant if they can offer you a credit card loan.
To make the process easier, faster and help your business get the funds it needs.
