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You Can Get a Small Business Loan – Even With Bad Credit

Looking to grow your business? Or just need a little extra working capital to keep your business moving? Our bad credit business loans offer between £10,000 – £3,000,000 for almost any purpose.

Check your eligibility online in just two minutes, with no impact on your credit score, and you could receive your funds in as little as 24 hours.

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What is a Bad Credit Business Loan?

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What is a bad credit business loan?

Lenders provide business loans to companies they consider to have a heightened risk of defaulting or delaying their repayments. Financial institutions, lenders, and suppliers evaluate a business’s creditworthiness based on its past payment performance, considering various factors e.g. amount borrowed, repayment frequency, and the timeliness of settling debts. These critical aspects help determine whether a business qualifies for a loan, as they indicate the level of risk associated with providing financial assistance to the company.

Running a business can be a pricey venture. All businesses need cash, and particularly in the early days, you need to spend money to make money. Poor credit can be a real problem. Even an issue as seemingly small as one missed payment cause some lenders to turn away, even from long-established businesses.

However, there are still providers that will help out with small business loans with poor credit customers, by moving past traditional lending methods.

What is a bad credit small business loan? Put simply, it’s a loan which allows small business owners to get the funding they need, without their credit history being a huge obstacle. Providers of these loans look beyond the basics to help you borrow the amounts you really need.

Getting a Small Business Loan With Poor Credit

Getting a bad credit business loan

There are many reasons small business owners might have bad credit. You may have paid off an old CCJ that simply hasn’t expired yet. Or the business may simply have borrowed too much over a short space of time. In general, a credit history is just that: History. We look at your current cash flow as well as what’s happened in the past, so we’re using what’s happening right now to determine the risk. Businesses with bad credit often believe that they can only apply for traditional finance. Thankfully, there are plenty of alternative options available allowing businesses to get the funding they need.

What Are The Types Of Loans Available For These Companies?

Our business loans take into account your current business performance. We look at how you’re doing day to day, which is how you run your business – in the present. We also consider how many payments your business is taking daily, and use this to consider how much we might lend you, 

What Can These Loans Be Used For?

What can bad credit business loans be used for

You can use small business loans for anything you need. Businesses often need funding for expansion or investing in new projects. You might need funding to get specific inventory items that you know are going to sell well. You might need specialist equipment to take your business to the next level. Or it could just be a case of keeping cash flow moving for essentials like utilities, paying employees or rent for business premises.

What Are The Advantages of These Loans?

Advantages of bad credit business loans

There are many advantages to the alternative methods of lending. A bad credit business loan means your credit history can stop holding you up. It means traditional loan providers can stop running multiple credit searches on you – searches that can damage your credit rating further. Also, some alternative methods of lending have shorter terms, which can be beneficial for businesses who aren’t in a position to make long term commitments. 

What Are The Disadvantages of These Loans?

One of the questions small businesses have is, are there any disadvantages to these types of loan. Well, they can end up costing more overall, especially if your credit rating is particularly poor. As with any loan, make sure you can afford the repayments and that the loan is cost-effective in the long run.

 

Will I Need to Put up Security for a Poor Credit Small Business Loan?

Another common concern is whether business owners will have to put up security for a poor credit business loan. This isn’t necessarily the case for every loan, and it depends on how poor your credit it as well as your trading status and how much you’re looking to borrow. Commonly, missed payments hold the business owner personally liable, rather than requiring them to put up collateral that the lender would reclaim. Higher rates of lending also reduce the need to provide collateral. For limited companies, there’s also the option to offer a personal guarantee in certain circumstances. Speak to a specialist to find out which options will work best for you and your business needs.

Reluctance of Traditional Lenders for Businesses with Bad Credit

Conventional lenders, like banks and credit unions have stringent lending criteria to safeguard their investments.

Capify take pride in our human-driven decision-making process. What sets us apart is we understand that every business’s financial situation is unique, even if it’s not perfect. Unlike relying on algorithms for approval, we thoroughly assess businesses with poor credit and provide them with a higher chance of receiving the necessary funding compared to traditional lenders.

When dealing with businesses who have credit issues, lenders perceive them as riskier borrowers, leading to the following obstacles in obtaining loans:

  1. Limited Finance Options and Higher Interest Rates: Businesses with adverse credit often have less available loan options, and what’s accessible typically comes with higher interest rates. These elevated rates offset the increased risk posed to the lender, if the loan is granted. Should they deem your creditworthiness insufficient, lenders may refuse you altogether.

  2. Increased Risk and Collateral Requirements: Lenders may require additional collateral when dealing with businesses with bad credit. This provides a safety net for the lender in case the business defaults on the loan. If the lender requires collateral or assets for the business to be funded, it’s referred to as a ‘Secured Business Loan.’

  3. Impact on Business Growth and Opportunities: Limited access to financing can hinder business growth. Without adequate funding, businesses may struggle to invest in new projects, hire additional staff, or purchase necessary equipment.

In these situations, businesses with bad credit might feel stuck, unable to access the funding they need to grow and expand the business, which is often the start of a financial death spiral. However, we can offer alternative funding options available to help these businesses overcome these challenges and achieve their goals, regardless of bad credit or CCJs. 

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Pros & Cons of Bad Credit Business Loans

ProsCons
Access to Funding: Provides essential working capital to businesses with poor credit histories.Additional Fees: May include origination or processing fees, raising the overall borrowing cost.
Flexible Eligibility: Lenders offer lenient criteria, making it easier to qualify despite past credit issues.Collateral Requirements: Often requires assets to secure the loan, risking business property if unpaid.
Potential for Credit Improvement: Timely repayments help rebuild and improve the business’s credit score over time.Higher Interest Rates: Rates are typically elevated to offset the lender’s perceived risk.
Quick Funding: Features faster approval and disbursement compared to traditional bank loans.Impact on Credit Score: Defaulting or missing payments will further damage credit standings.
Business Growth Opportunities: Supplies capital to expand operations, purchase inventory, or pursue new projects.Limited Loan Amounts: Lower credit scores often cap the total amount a business can borrow.
Diverse Loan Options: Multiple loan types exist, allowing businesses to find tailored financial solutions.Predatory Lenders: Increases exposure to deceptive lending practices and harmful debt traps.
Financial Flexibility: Capital can be freely used to cover a wide variety of daily operational expenses.Shorter Repayment Terms: Brief repayment windows increase monthly payments and cash flow strain.
Alternative to Traditional Lenders: Serves as a viable funding source when turned down by mainstream banks.Potential for Loan Scams: Requires extra diligence to avoid fraudulent offers and illegitimate lenders.

Bad Credit Business Loan FAQs

Businesses with poor credit can receive financing through bad credit business loans. Lenders often secure business loans with less-than-perfect credit against property or require a cosigner. At Capify, we judge each application on its own merit. As long as your business meets our simple criteria, you will be eligible for a loan.

Please reach out to us if you would like to apply for a business loan with bad credit. We treat each application on its own merit, we can fund you even if you’ve been denied a business loan before. Just follow these steps and we’ll help you obtain a business loan with bad credit:

  1. Check your eligibility. As long as you’re a UK-based business that’s been in operation for at least 12 months you can be pre-approved. This WON’T affect your credit rating.
    Answer a few questions
  2. related to your business and turnover.
  3. That’s it! You’ll instantly know if you’ve been pre-approved for a business loan, even with bad credit. Get started now.

Please reach out to us if you would like to apply for a business loan with bad credit. We treat each application on its own merit, we can fund you even if you’ve been denied a business loan before. Just follow these steps and we can help you obtain a business loan with bad credit:

  1. Check your eligibility. As long as you’re a UK-based business that’s been in operation for at least 12 months you can be pre-approved. This WON’T affect your credit rating.
  2. Answer a few questions related to your business and turnover.
  3. That’s it! You’ll instantly know if you’ve been pre-approved for a business loan, even with bad credit. Get started now.