Business loans for bad credit are just loans that your business can access even if it doesn't have a great credit rating.

But remember that if your business has a bad credit rating, you're unlikely to get the lowest and cheapest rate for business loans. That's because lenders think it's risky to lend to you. So business loans for bad credit often don't come with brilliant rates.

If you're getting a personal loan, lenders look at your personal credit score. With bad credit business loans, lenders look at your business credit score.

Can I get a business loan with bad credit?

If you've applied for a regular business loan and been rejected because of your business's credit history, don't panic. There's still a way to get a business loan with bad credit. Bad credit business loans are designed especially for businesses with poor credit history.

We're here to tell you how to get a small business loan with bad credit.

To get business loans for bad credit, UK wide, you'll need to know:

  1. Your business credit score. A rejected business loan application doesn't necessarily mean you've got a bad credit score. But each lender has its own criteria for loans. If you find out your business credit score, you'll be able to check which loans you're likely to get before you apply.

  2. Why you want to borrow. Decide why you're looking into business loans for poor credit, and what you'll be using your loan for. Bad credit small business loans might not be your only option. You might be able to use crowdfunding platforms or access business grants for small businesses

  3. How much you want to borrow. Our comparison table shows you the business loans for bad credit, UK wide, ranging from 1,000 up to 500,000.

  4. How long you want to borrow for. Lenders offer bad credit business loans with terms that last between three months and five years

  5. What kind of finance works best. Find out what other types of business finance you could go for, instead of a business loan for bad credit.


If your business has poor credit history it can be harder to get the finance you need. But some lenders are more likely than others to offer loans or business accounts for poor credit. A business loan with bad credit isn't an impossibility.

Check the criteria before you apply for any business funding with bad credit as the loans vary a lot from one lender to another. If your business doesn't meet any of the criteria for a specific loan or lender, strike that one off your list and look elsewhere. Don't just keep applying without checking the criteria, as it could damage your credit score.

For online-only lenders offering business loans, bad credit is often less of a problem. They might be more accessible to you because they have fewer requirements than traditional lenders, like banks.

Once you find some potential lenders you should check the representative Annual Percentage Rate (APR). Also check the length of the borrowing term. Both these will affect the total cost of your loan. Remember that for a business loan, bad credit pushes up the costs.

Our comparison table at the top of this page shows you each lender's representative APR. That's the interest rate they must offer to at least 51% of applicants.

Here's a guide on how business loans work.

What affects your credit score?

Each lender has its own criteria on what is a 'good' credit score. Here are some factors that can affect it:

  • Late or missed payments

  • Existing debt

  • County Court Judgments (CCJs) or bankruptcy

  • Making multiple applications in a short space of time.


A Credit Reference Agency (CRA) generates your business credit score. It's a way to indicate how reliable you've been with borrowing in the past. The three main CRAs in the UK are Experian, Exquifax and Callcredit.

Lenders use this information to decide if you're eligible for a loan and to set terms if your application's successful. A higher credit score increases your chance of being offered a cheaper loan.

For bad credit business loans, guaranteed approval, isn't really available. You might be able to find some no credit check business loans but be aware that the rates for these could be extremely high.

Here's why your credit score matters.

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

Choose one of the CRAs listed above and check your credit rating.

Once you've got access to that information, check whether:

  • the details are correct and up-to-date - ask for amendments to be made if not you've got your business name on your business bank account

  • you're paying bills on time and that this shows on your statements and cash flow

  • you're filing your accounts on time

  • old accounts you no longer need are closed.


Then, start thinking about accessing other credit options like a business credit card. Using one of these will help build up your credit rating.

If you take out a bad credit business loan and repay it on time (without missing any payments), this can improve your credit record. If you miss or are late with payments, this could cause further damage.

And, whatever you do, don't start applying for lots of different loans. The more applications you make, the worse your credit rating will become. That's because each application generates a credit check which goes on your file - and it makes it look like you're in urgent need of cash.

Finding start-up loans for bad credit

Getting finance for a new start-up business can be tricky. Lenders see you as risky because your business doesn't have a solid financial history.

For bad credit startup business loans, guaranteed approval isn't a feature. When you're looking at business startup loans for bad credit, UK wide, lenders look at your personal financial records. They want to see how you've handled borrowing in the past.

So when it comes to start up business loans, bad credit on your personal file isn't ideal. A poor personal credit rating might affect your ability to get a start-up business loan.

Startup business loans with poor credit each have their own internal credit scoring system. Applicants have to meet their requirements to get a loan.

Start up business loans for bad credit are a good place to start if your business doesn't have any borrowing history at all. It's a way of helping your business to build up a good credit rating.

If you're looking into startup business loans with bad credit, you'll notice that there are different rates for businesses under two years old.

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

For new business loans, bad credit among any of the business partners might be something lenders look at. Lenders can ask to check the financial health of any partners in your business. If they've got good credit and a good reputation, this could help your application.

Finding bad credit small business loans

For small business loans, poor credit isn't always an issue. If you're running a small business which doesn't have a great credit rating, you won't need a large turnover to get access to bad credit small business loans.

But, if you're wondering how to get a small business loan with bad credit, the main thing to remember is that you'll have to meet the lender's criteria.

When it comes to small business loans, bad credit generally means the criteria will be stricter. For example, a lender might say your business must not employ more than 50 people or have an annual turnover of over 150,000, to qualify for a loan.

Start up loans for bad credit are a good way to improve your credit score, if you make repayments on time. It means you could get a better borrowing rate in the future.

Lenders will look at the current financial health of your business so you'll have 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.

When you compare small business loan costs you should look at the amount you're borrowing, over how long, and the Annual Percentage Rate (APR).

Compare small business loans.

Finding business loans for sole traders with bad credit

If you're self-employed and the sole owner of your business, you're a sole trader. This means you're personally responsible for your business' finances, including any borrowing.

If you need a cash injection into your business, lenders will look at your personal credit history to decide whether to lend to you. If you have poor credit history, you might need to look specifically at business loans for sole traders with bad credit.

Before you apply you should check the current financial health of your personal finances. It's important to check that you:

  • are on top of any credit card repayments or loan agreements

  • avoid repeatedly 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.


Look at the individual requirements of any business loans for sole traders with bad credit before you apply. Applying for loans that you get rejected for will affect your credit rating.

Short-term vs long-term bad credit business loans

With short-term business loans, you'll often see higher interest rates but lower interest overall. This is in contrast to long-term business loans, where you'll see lower interest rates but higher interest overall.

Whether you're looking at long-term or short-term business loans, bad credit means higher rates.

The big difference between long-term and short-term loans is the repayment length. There are other key differences that will affect what's best for you when you're choosing business loans for bad credit.

Short-term loans are good if you need cash straight away. Some lenders transfer the money to your account within 24 hours which is great for cash flow. The downside is that your repayments are likely to be higher than if you're borrowing the same amount over a longer term.

A long-term business loan might be a good option when your business needs a helping hand to make an investment. It offers lower monthly repayments, but you'll pay interest for longer with this type of loan.

What about a secured business loan with bad credit?


Sometimes, with unsecured business loans, bad credit can be a reason for a lender to reject you. You might like to look into secured business loans instead.

A secured business loan is a way of using your business assets to borrow money for your company.

With unsecured business loans, bad credit can seem risky to a lender and they might choose not to accept you. Because a secured loan is secured against your assets, it's less risky for the lender and they're more likely to accept you.

With a secured loan you might be able to borrow more and get a longer loan term. They might also be cheaper. But remember that you're putting your business at risk if you can't make the repayments. You'll also need a suitable asset to apply, and the application process is longer so it takes more time before you have the money in your bank.

Are there alternatives to business loans for bad credit?

If you need to borrow a small amount, you could consider a business credit card as an alternative to business loans for bad credit. You'll still pay interest on what you spend.

An agreed overdraft is another alternative to bad credit business loans. This would let you cover your bills and expenses in cash with very little interest.

Bad credit business loan FAQs

Q

Can I borrow if my business has bad credit?

A

Yes, some lenders will consider your application if you have had credit issues in the past, but it may be more expensive.

Q

What does APR mean?

A

It means Annual Percentage Rate and it is the annual interest cost of the business loan including fees.

Q

Do I need a guarantor if I have bad credit?

A

Not all bad credit business loans require a guarantor but some do, so check this before you apply.

Q

How can I improve my business credit score?

A

Check your credit record is accurate and up to date, and ensure you pay your creditors on time.

Q

Can I get a business loan with no credit check?

A

Some lenders advertise no credit check business loans but they may be more expensive.

About our comparison

Q

Who do we include in this comparison?

A

We include business loans available directly from lenders and through brokers on our panel. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.