Business loans for people with bad credit UK

adverse credit doesn't necessarily mean the end of the road for business financing, read our expert guide

Bad credit business financing – know your stuff!

First of all, and most importantly you need to understand the extent of the bad credit and how long ago it occurred. Access to your credit reports will be really helpful here and will provide all of the information lenders need.

Will I get accepted for a merchant loan with bad credit?

As with all finance agreements, different lenders have individual lending criteria. “Bad credit” can mean anything from missed payments and arrears to defaults, CCJ’s and even bankruptcy. If you are dealing with specialist advisors they should know where you can be placed prior to submitting the application. There is no point in spending time applying to lenders that will never accept a bad credit case, it’s worthwhile taking a little longer to do your research and getting it right first time.

If you have experienced some form of bad credit it’s best to provide as much information at application stage to the lender as possible, explaining why the situation happened and proving that you have or are currently resolving matters, can go a long way to making your application seem more appealing to prospective lenders. Honesty is the best policy!

As with all loan applications, there is no straight answer and ultimately the decision to lend is made at underwriting stage – our brokers will be up front and honest with you, conducting the correct research and packaging each case on an individual basis, therefore you will stand the best possible chance of getting accepted for business financing with bad credit.

How to get financing for a business with bad credit in the UK

Once you have established that you can get financing it’s important to choose a loan which is suitable for both you and your company, here we look at the options available.

Start-up loans for bad credit

Start-up business loans for people with bad credit can be difficult to come by, that’s not to say that it’s impossible to secure finance for a new business idea. Some companies do not rule out business loans for bad credit new start-up companies, no matter the size big or small. Depending on the adverse credit history and time scale, you could be accepted via a high-street bank.

Financing a new business with bad credit may come with higher fees or rates, at an already costly time this is because the application will be seen as high risk, so it’s important to deal with experts in this type of lending, to give you a higher change of being accepted first time. Written proof to aid your application will go a long way, this includes; formal business plans with future turnover projections, industry knowledge (especially if you have been employed in a similar line of work,) an explanation for the bad credit and why it occurred and proof of repayments.

Short term business loans

Short term business loans for people, such as directors or shareholders or companies with bad credit prove popular in the current market. The reason for this is due to the higher interest rates that are often associated with lending to people with bad credit. The shorter the repayment period the better when paying such rates. Obviously, affordability is considered here – and it’s important not to stretch yourself or the business when it comes to repayments. The last thing you want to do is to end up causing further adverse credit issues.


High risk business loans

Loans can be classed as ‘high risk’ for two reasons; firstly, lenders that specialise in bad credit business loans in the UK, choose to do so and accept the higher risk of dealing with clients that have failed to make payments historically. Lenders such as these realise the need for business financing for clients with bad credit and understand that sometimes blots occur on credit files, through unfortunate circumstances beyond individuals control.

The other form of ‘high risk’ business loans is industry related, for example; lending money to clients dealing with seasonal products – how will the repayments be made during quieter months? Lenders who specialise in this type of lending are prepared to take the ‘risk’ with companies that fall under either category. Often the application process is straight forward, as with most high-street banks, however the underwriting process tends to be a little more manual, considering each application on a case by case basis.

Merchant cash advances

Also known as a PDQ cash advance or credit card merchant loans, this type of finance is perfect for businesses with at least four months PDQ transaction history. An advance is given based on a percentage of the card turnover and repayments are made from deductions on future months’ card payment transactions. This finance is often agreed very quickly, and the approved with no credit checks. The beauty of this product is that there is no set repayment figure, repayments are taken at a percentage of the card turnover, meaning that in quieter months’ repayments are lower and in busier months, higher. These loans are commonly used to refurbish premises, or invest in new equipment. We have put together a guide, to explain this in a little more depth HERE.


Bad credit business loans FAQ

Can I get a business loan with bad credit?

Understandably, a lot of clients we deal with want reassurance before applying for a business loan, especially when using providers specifically for bad credit cases. We realise that this is important and do everything we can to keep you updated throughout the application process. The facts are that we don’t make the lending decision, the lenders underwriting team do; however, we can use our industry knowledge to make sure you have the very best chance of being accepted.

Commercial loans for businesses with bad credit can be confusing so we do our best to use plain English, and work with you towards getting finance approved. Most people with bad credit can be placed with lenders, depending on when the bad credit occurred and its severity.

Can I get a business loan after bankruptcy?

Getting a business loan after bankruptcy can be tricky, however its not to say that it can’t be done. Having a clean credit history after the bankruptcy occurred will help your case, also having an expert package your application correctly will give you the best possible chance of being accepted.

I’m looking for a small business loan but have bad credit – what’s my best option?

It’s important to look at what you require the loan for and the period in which you wish to repay the balance. Micro business loans for people with bad credit are available. Depending on the scale of the bad credit and when it occurred, you could be accepted through a high-street bank.

Are there such thing as bad credit start-up business loans with guaranteed approval?

This is quite possibly our most asked question!! New business loans for clients with bad credit carry a risk to the lender, therefore the majority of lenders will conduct full underwriting of each application and, thus, guaranteed approval isn’t possible (including a credit check) before agreeing whether to lend or not.

Having said that we deal with lenders that specialise in lending to clients who have experienced bad credit, we are upfront and honest when it comes to applying and we do our research prior to submitting a full application. We do not want to waste anyone’s time so if it really can’t be done we will tell you very quickly. We deal with these types of cases every day so, if there’s a lender out there for you, we’ll find them. So, if you enquire with us we can pretty much guarantee a we’ll find a lender for your business loan after we’ve looked into your circumstances in more depth!

I need a business loan QUICKLY, but I have bad credit. What are my options?

Instant loans for companies or people with bad credit are pretty hard to come across. Our finance partners can work quickly, as long as you can provide all the information and paperwork needed to make a full application. A fast way to gain finance is a merchant cash advance, depending on the size of the loan you require and the length you have been trading. Speak to our industry experts, to discuss the best way to get a business loan quickly, they will point you in the right direction! Alternatively, unsecured loans both to the individuals or the business may be an option depending on the circumstances.

Can I find a start-up business loan with no credit check?

Some companies do offer ‘no credit check’ business loans, however the rates can be eye wateringly high and this may not be the most efficient way to fund your new business. No credit check business loans are often seen as a quick way to source funds; however, it may be worth waiting a few days, and could save you money in the long run. As with the majority of lending, there is no guaranteed approval especially when trying to agree finance quickly.

Speak to our specialists about your bad credit history, it could be better for you to use a lender with credit checks and pay a lower interest rate. This was the case with a group of women who recently came to us for a start up business loan. We found them a rate much better than was quoted elsewhere.

What is the difference between secured and unsecured business loans?

Secured business loans for companies with bad credit are easier to obtain, due to the fact that the company lending funds secure their risk against an item, this could be machinery, pool cars or computer equipment. If the borrower is unable to make repayments the security can be repossessed, meaning that the risk to the adverse finance company is limited.

Unsecured bad credit loans, are taken with personal guarantee. Although not impossible to secure, these can be slightly more tricky. The lending company will look at why the person or company has experienced bad credit and assess whether they are prepared to lend. It’s important to build a strong case to present to these lenders, proving that previous missed payments, CCJ’s or even bankruptcy were a ‘one off’ and showing the prospective new lender that although deemed high risk your company has a solid ability to make repayments.

If my business is already trading, can I still apply for start-up business loans with bad credit?

Yes – providing you are still in the early stages of launching your business, start-up loans are available. It’s important to look at all options available, and to compare on a pound for pound basis to know if this is still the best type of loan to apply for.

At Merchant Advice Service, we aim to provide in depth loan information enabling you to make the correct funding choice for your business, we have a range of lenders that specialise in high risk and bad credit loan applications.


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Speak to us directly and get any questions you have answered. Submit your details and we’ll be in touch shortly.

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