Bad credit business loans: Compare adverse credit business finance

Compare adverse credit business loans today to find the right one to help finance your business.

  • Compare bad credit business loans from leading brokers and lenders
  • See the rates you’re eligible for before applying
  • View different finance options for business loans with bad credit

Compare bad credit business loans from leading brokers and lenders

Looking through a range of options gives you more chance of securing a great deal. You'll only find results from genuine companies. Our data experts check each company before we add them to our comparisons.

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How to compare bad credit business loans

1

Make a business plan

Decide why you are comparing deals for business loans with bad credit and why you want to borrow the money. Work out how much you need to borrow and also how long you would need to repay. Lenders offer bad credit business loans with terms that last between three months and five years

2

Check the terms before applying

We'll show you our best business loans for bad credit however ensure to check the criteria before applying as applying for multiple loans can harm your credit score. Confirming your business's credit score will help you decide which loans you would be likely to get before applying.

3

Apply for the loan

Typically, you'll need to provide business, address information and bank details, as well as a summary of your monthly incomings and outgoings. Once you've been approved, the funds are usually deposited within a day or two, but this can depend on the lender or broker.

Bad credit business loan deals

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What are bad credit business loans?

Bad credit business loans are designed especially for businesses with a poor credit history. You’re unlikely to get the lowest interest rate with these loans because lenders think it’s risky to lend to you based on your business credit score.

Can I get a business loan with bad credit?

Yes, don’t panic. Even if you’ve already applied for a regular business loan and been rejected because of your business’s credit history, you still have options. Some lenders are more likely than others to offer loans or business accounts for those with poor credit. 

What affects your credit score?

Each lender has its own criteria on what makes a “good” credit score. Factors that can adversely affect your credit score include: 

  • late or missed payments

  • existing debt

  • County Court Judgments (CCJs) or bankruptcy

  • making multiple applications in a short space of time

Your business credit score is generated by a Credit Reference Agency (CRA). The score indicates how reliable your business has been with borrowing in the past. Lenders use this information to decide if your firm is eligible for a loan and set the terms if your application is successful. A higher credit score increases your chance of being offered a cheaper loan.

Here’s why your credit score matters.

How can I improve my credit score so I can access bad credit business loans?

First, check your current credit rating using one of the three main CRAs in the UK – ExperianEquifax or Transunion – and make sure that your details are correct and up to date and that the name you trade under appears on your business bank account. If you spot any errors on your file, ask the CRA to amend them. 

Once you’ve verified that your file is correct, try to do the following to improve your score:

  • File your business accounts on time

  • Pay bills when they are due and make sure this shows up on your records

  • Space out credit applications – applying for lots of different loans in a short space of time will make your credit record worse

  • Close bank accounts that you no longer use

  • Use credit – using a business credit card responsibly can help build up your credit rating

  • Make loan repayments on time – missing or late payments could cause further damage

Are there alternatives to business loans for bad credit?

You could consider a business credit card if you need to borrow a small amount, but remember that you will pay interest on what you spend. 

An agreed overdraft is another alternative and could help cover your bills and expenses without paying too much interest. 

Other avenues might involve using crowdfunding platforms or applying for a small business grant.

How can I find business loans with bad credit?

The first step is to identify what you want. Think about:

How much you want to borrow

Our comparison table shows you available business loans for bad credit from £1,000 up to £500,000

How long you want to borrow

Lenders offer bad credit business loans with terms that last between three months and five years

What kind of finance you want

Find out if there are other types of business finance you could go for that might be more appropriate

You also need to check the eligibility criteria for the loans that interest you – these vary considerably from one lender to another. Understanding their requirements will ensure you don’t apply for any loans that aren’t available to your business. Remember, multiple applications could damage your credit score further.

Other things to consider when looking for business loans with bad credit:

  • Online-only lenders: these may be more accessible because they have fewer requirements than banks and other traditional lenders

  • The length of the loan: the repayment period affects the total cost of your loan

  • The representative APR: This is the interest rate that a lender must offer to at least 51% of its applicants. APR also affects the cost of your loan and is shown in our comparison table

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How to find start-up loans for bad credit

Getting finance for a new start-up business can be tricky. There’s no guarantee you will be approved. Lenders see you as risky because your business doesn’t have a solid financial history. They will look at your personal financial records to see how you’ve handled borrowing in the past. 

Bad credit on your personal file isn’t ideal and might affect your ability to get a start-up business loan. The same will be true for any business partners – lenders can ask to check the financial health of any partners in your business. However, if they’ve got good credit and a good reputation, this could help your application.

Start-up business loans with poor credit are suitable for businesses with no borrowing history and can help them build up a good credit rating. Each loan will have its own internal credit scoring system and requirements, which you’ll have to meet. You’ll also find different rates for businesses under two years old.

Here’s our comparison table of business loans for start-ups.

What you need to know to start a business

Our full guide to sacking the boss and starting out on your own - from finding a unique business idea, to getting the money to fund it all the way through to secrets and tips from people who've made it themselves.

Finding bad credit small business loans

Poor credit isn’t always an issue for small business loans, and you don’t need a significant turnover to get access to them.

You need to meet the lender’s criteria, which are stricter for those with bad credit. For example, a lender might only lend to businesses with fewer than 50 employees or an annual turnover of over £150,000.

You also need to supply up-to-date accounts. The more proof you can provide of your business’ finances, the better chance you have of getting a lower rate.

Compare small business loans.

How can I find business loans for sole traders with bad credit?

Your personal credit history plays a crucial role in getting business finance as a sole trader, so you must vet this before applying for credit. Make sure that you: 

  • Stay on top of any credit card repayments and loan agreements

  • Don’t keep maxing out your credit card. If you do this often, it can look like you’re struggling to handle your finances

  • Address any areas on your credit score that might be contributing to a negative rating

Again, avoid applying for loans where you don’t meet the eligibility criteria. Repeated applications will harm your credit rating.

Short-term vs long-term bad credit business loans

The big difference between long-term and short-term loans is the repayment length. Short-term business loans charge higher interest rates over a shorter payment term, so monthly repayments are higher, but you pay back less interest overall. The opposite is true with long-term loans: monthly repayments are lower, but you pay more in the end because the loan lasts longer. 

Short-term loans are good if you need cash straight away – some lenders transfer the money to your account within 24 hours. Long-term loans are better for investments.

What about a secured business loan with bad credit?

A secured business loan is a way of using your business assets to borrow money for your company. Because the loan is secured against your company’s property and effects, there’s less risk for the lender, and they’re more likely to accept you.

With a secured loan, you might be able to borrow more, get a longer loan term and still pay less over the loan duration. But don't take them on likely, remember there are risks too.

Salman Haqqiquotation mark
You’re putting your business at risk if you can’t make repayments on a secured loan. You’ll also need a suitable asset and the application process takes longer, so expect to wait before the money hits your bank
Salman Haqqi, Loans expert

Bad credit business loan FAQs

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What you need to know to start a business

Our full guide to sacking the boss and starting out on your own - from finding a unique business idea, to getting the money to fund it all the way through to secrets and tips from people who've made it themselves.

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Last updated: 17 May, 2022