Require Immediate Support? Helpline 0800 056 0410

Can I get a business loan with bad credit?

PUBLISHED ON: 21/11/2023

Some lenders specialise in providing finance to businesses with a poor credit rating, which means you can get a business loan with bad credit. Your creditworthiness isn’t the only element lenders consider but because a low credit score indicates a chequered history of repayments, it’s an important factor.

A poor credit score will limit the choice of financial products available to you but the good news is that specialist and alternative lenders also exist and can help businesses with bad credit to access the funding they need.

Accessing lending with bad credit

Various forms of alternative finance don’t rely on a good credit score and provide a vital opportunity for you to finance your business despite having bad credit. It’s important to be careful not to make too many lending applications in a short period, however, as this can worsen your credit score.

UK Business Finance can search the market on your behalf and find the best funding options for your business. We are commercial finance brokers and understand the criteria of all UK lenders.

What types of business loans are available with bad credit?

Bad credit business loans with fixed repayment schedules are similar to ‘standard’ loans but with less favourable terms. You’re likely to only be offered higher interest rate loans as the risk to the lender is greater given your history of repayment.

You may also be restricted in terms of the amount they’re willing to lend, and the length of time to repay, as a shorter term further limits their risk exposure. You should also consider the types of borrowing that don’t require a good credit score, however, and these include invoice finance and hire purchase.

Bad credit business loans

Specialist lenders offer loans to businesses with bad credit, allowing them to improve their credit score over time whilst providing vital funding. Loans may be secured on a business asset, which reduces the lender’s risk as it can be repossessed in the event of default.

Secured business loans tend to attract lower interest rates for this reason. If you opt for an unsecured loan you’ll only have access to those with a higher interest rate but on the positive side, you don’t have to put forward any collateral.

What are some of the alternative borrowing options for bad credit?

Some forms of alternative finance rely on your trading history and the strength of your sales ledger rather than your company credit score. This is highly beneficial as it enables easier access to flexible funding that supports growth and helps your business escape from bad credit.

Invoice finance

Factoring and invoice discounting are just two forms of invoice finance that support working capital availability. Briefly, you need to have a strong sales ledger to be eligible as the financier releases the majority of the value of your customer invoices soon after issue.

Hire purchase

Hire purchase is a form of asset finance that uses the asset as security for the lender. For this reason, a business’s credit rating isn’t a factor for eligibility so you can finance the purchase of expensive hard assets and avoid using your business capital.

Seek expert support when applying for bad credit business loans

It’s vital to make sure that you protect your credit rating from any further negative impact and build it up over time. UK Business Finance are commercial finance brokers with extensive experience in helping businesses find the borrowing they need.

We provide the support you need to access funding in this situation and scour the whole of the market to find the best deals. Please get in touch with one of the team to find out more.

Contact us for more information

  • Fully Independent
  • Whole Market Access
  • Matchmaking Process