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business loan, credit score

How to get a business loan with bad credit

Capitalise Jul 13, 2023

Starting or expanding a business often requires a significant amount of capital. However, obtaining a business loan can be challenging if you have bad credit. While a less-than-perfect business credit score may make traditional lenders hesitant to provide funding, it doesn't mean you're entirely out of options. 

We explore strategies and alternative solutions that can help you get a business loan, even with bad credit.


What is a bad business credit score?


A bad business credit score is one with a low rating. The specific rating can vary depending on the different credit bureaus, Experian, the credit bureau used by 90% of lenders and suppliers rate scores between 0-100. A business credit score of less than 40 would be considered a poor credit score and as high risk to lenders or other companies. 

 

Getting a bad credit business loan 

 

  • Understand your business credit profile

Before applying for a business loan, it's crucial to understand your credit profile. Check your business credit profile to identify any errors or discrepancies and take steps to correct them. Understanding your credit score will help you gauge the potential challenges you may face and develop a strategy accordingly.

 

  • Explore alternative lenders

Traditional banks may be less inclined to lend to businesses with bad credit. However, some alternative lenders often have more flexible lending criteria. At Capitalise, we work with over 100 lenders, this means we can explore the market and find specialist lending products where a business credit score plays a less significant role. 

 

If you have valuable assets, such as equipment, property, or inventory, you may be able to secure a loan using these as collateral. Secured business loans pose less risk for lenders, making them more willing to provide financing, even with bad business credit. However, keep in mind that defaulting on a secured loan could result in the loss of your assets, so evaluate your ability to repay the loan before committing.

 

  • Improve your business credit score 

While it may not provide an immediate solution, working towards improving your credit score is a long-term strategy that can open up better financing options in the future. Make timely payments on existing debts, reduce your credit utilisation ratio, and avoid taking on additional debt. Over time, your responsible financial behaviour will reflect positively on your credit report.

Top tip: You can improve your business credit score in as little as 5 working days with our Credit Review Service


Whilst it can cause some challenges, getting a business loan with bad credit is possible.

Find a business loan with bad credit.

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