Bad Credit Business Loans

A business with a bad credit score will often struggle to get funding from traditional lenders like banks. If your company has missed loan payments, made late credit card payments, or has court judgments (CCJs) against it, banks will often see it as too risky. This can be true even if your business is doing well now or has big plans for the future.

However, a bad credit score shouldn’t stop you from getting funding. Thanks to the growing alternative finance (altfi) sector, there are more options today for bad credit business loans. These lenders specialise in helping businesses, especially small and medium enterprises (SMEs), get the money they need, even if their credit history isn’t perfect.

Bad credit business loans

Bad credit business loans are designed for businesses with a poor credit score. Traditionally, businesses in this situation have to rely on borrowing from friends and family or relying on credit cards. Today, business loans for bad credit are available through altfi lenders. These lenders are more flexible in assessing a business’s situation than banks. Even if your credit score is bad or non-existent, you may still qualify for funding.

This flexibility is a big reason alternative finance providers have become popular with small businesses. Altfi lenders understand the unique needs of SMEs and offer small business loans with bad credit to help companies continue growing despite their credit history.

How do alternative finance providers assess loan applications?

When applying for business loans for bad credit, it’s important to understand how altfi lenders evaluate your application. Each lender has its own way of deciding who to lend money to, and the criteria they use can vary a lot. This is why research is key.

For example, Fleximize, an altfi lender, doesn’t just look at your credit score. They try to find ways to approve your loan by considering a number of different factors, including:

Is your business showing steady growth?
Have you been making better efforts to repay debts?
Is your personal credit score better than your business credit score, or vice versa?

Fleximize also looks at your personal and business credit scores. Even if one score is bad but the other is good, you may still be approved. They may also ask if you can provide a personal guarantee, which is a promise to repay the loan if your business can’t.

Additionally, if your business has directors, each of their credit scores will also be considered. Altfi lenders may be more likely to approve business loans for poor credit, but they still take the decision seriously. If you have bad credit, be ready to pay higher interest rates, since lenders often charge more to reduce the risk they are taking.

How to check your credit score

Before applying for a loan, it's a good idea to check both your business and personal credit scores. This will give you a better understanding of where you stand and what lenders may consider when evaluating your application.

If you want to check the credit score of your small business, Experian provides a business credit report service.
For personal credit score reports, try Credit Karma and Clear Score.

Knowing your credit scores in advance can help you anticipate what to expect when applying for small business loans with bad credit.

Ask Fleximize

Trying to get a business loan with bad credit can be daunting. Not only will Fleximize listen to your concerns, but it also has the experience to help you find the right funding solution for your own situation. So give us a call on 0207 100 0110, get a quick quote or apply online now.

Your common questions answered

What is bad credit in business?

Bad credit in business refers to a history of missed or late payments, defaults on loans, or legal judgments like county court judgments (CCJs).

A poor credit history can make it hard for businesses to get approved for loans from traditional banks, but alternative finance providers are often more flexible. They may still offer business loans for bad credit, depending on other factors, like the business's growth potential and overall performance.

Can I get a business loan with a bad credit score?

Yes! Business loans for bad credit are available from alt-fi lenders.

While banks may reject your application due to a low credit score, alternative finance providers are more open to working with businesses in this situation. As long as other parts of your business are strong, such as growth and repayment history, you still have a chance of getting approved.

Keep in mind, though, that the interest rates may be higher, and some lenders might ask for a personal guarantee.

What is a fast loan for a company with bad credit?

A fast loan is a type of loan that is processed and approved quickly, often within days.

Many altfi lenders offer fast loans for companies with bad credit. These lenders understand the need for quick access to funds and can speed up the approval process compared to traditional banks. This makes them a good option if you need capital urgently.

Can you take over a business with bad credit?

Yes, you can take over a business even if you have bad credit. However, getting financing for the takeover can be more difficult.

Lenders may ask for proof that the business is profitable and has potential for growth before they approve funding. Although it may take extra effort, it’s still possible to secure a business loan for bad credit to help with the acquisition.

What is the lowest business credit score?

There is no fixed minimum business credit score that applies to all lenders, but a score below 500 is generally considered poor.

If your score is in this range, it may limit your options, but some altfi lenders will still consider you for a loan. They might be willing to offer business loans for poor credit, but the terms may be stricter, and the interest rates may be higher.

Will I get a business account with bad credit?

Yes, you can still open a business account with bad credit, but some banks may charge higher fees or limit the services you can access.

You’ll need to do some research to find a bank that is willing to accommodate your situation. Some banks are more lenient with businesses that have a low credit score, so it’s worth shopping around.

Does a business loan hurt your personal credit?

Yes, a business loan can affect your personal credit score, especially if you provide a personal guarantee. If your business fails to make repayments, the lender can hold you personally responsible, which may lower your personal credit score.

It’s important to weigh the risks before providing a personal guarantee on a business loan for bad credit.

Can you set up a limited company with bad credit?

Yes, you can set up a limited company even if you have bad credit. Having a poor credit score won’t stop you from legally starting a business. However, it can make it harder to get financing or establish business credit. Altfi lenders may be more open to lending to a new limited company, even if you have bad credit.

Can I get a business loan as a sole trader?

Yes, you can get a business loan as a sole trader, even with bad credit. However, as a sole trader, your personal credit score will play a big role in the loan approval process.

Lenders often view sole traders and their personal finances as closely linked, so keeping your personal credit in good shape is important if you’re seeking funding.

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