How to get a business loan with bad credit
Is bad credit stopping you getting a business loan? Find out how you can get a bad credit business loan.
Can I get a loan with bad credit?
Having a poor credit history can often hinder business finance applications, especially through the more traditional routes.
This is not ideal as many businesses continue to suffer due to the restrictions that have come with Covid-19, making it more difficult to finance a company’s everyday expenses. This would be something that could be easily covered with a working capital loan or poor credit loan.
You may be wondering how to get a loan with bad credit. This article covers the finance options available if you or your business has a poor credit rating.
Business loans with bad credit
Applying for small business loans with bad credit can be a frustrating experience. At Newable Finance we can help you and your business secure a business loan with bad credit. Here we explain how to access small loans for bad credit.
What is a bad credit loan?
Bad credit business loans are designed for businesses and their owners who may struggle to get finance from many mainstream business loan providers due to having bad credit history.
What is bad credit history?
Bad, or poor, credit quality is where a lender believes that a borrower has a low likelihood of repaying a loan advanced to it. This is usually because the borrower has some evidence in their credit history of previously not meeting their obligations on time and in full.
Before applying for a business loans for poor credit, it can often be worth a borrower looking to improve their credit profile by paying off old debt and bringing accounts up to date.
Will a business lender look at my personal credit history?
The majority of small business loan providers will look in detail at both the company and the owner, or, director’s credit history. Because of this, even if a business has managed its debts well, the bad credit history of an owner, or, director can cause many lenders concern.
What are the options available to secure a business loan with bad credit?
Some lenders specialise in lending to businesses where the credit history of the borrower would not be accepted by other lenders. Typically, these lenders will offer both unsecured business loans and secured business loans.
A secured business loan can be a viable option for many seeking a business loan with bad credit as the lender can take security over an asset (such as property) which they may sell to recover their funds in the event a borrower cannot pay.
Can I apply for a bad credit business loan?
Getting a business loan with bad credit is not impossible, there are many lenders who can support businesses which have bad, or poor credit, and at Newable Finance we work with multiple lenders who can help. Many of these lenders operate manual underwriting procedures so are able to tailor their approach to each businesses circumstance.
Speak with us or make an enquiry and we will get back in contact with you to discuss your options.
How much does a bad credit business loan cost?
Typically, business loans for bad or poor credit applicants are more expensive. The increased price reflects the lender’s perceived increase in risk that they may not receive their funds backs.
Often, lower rates can be secured if a borrower has collateral available to offer the lender as security, this could be plant and machinery, property or trade debtors.
Is a bad credit business loan suitable for your business?
A small loan for bad credit may be suitable if your business needs to obtain financing, can afford it but has struggled to access other lenders.
What can bad credit business loans be used for?
Bad credit business loans can be used for a wide range of business purposes. Having a clear use for the funds at application stage usually strengthens an application and most lenders will expect to this to be provided.
What information will I need to apply?
Every business loan provider will have their own list of requirements but most lenders are likely to ask to see supporting information to assist with your application. This may include recent accounts, bank statements, VAT returns and details of how you use your requested business loan.
If you know that you or your business has a bad credit profile, having an explanation as to why it has happened can be useful for lenders to better understand your application.
How much can I borrow?
A business loan can be used to borrow just about any sum depending of course on the lender, the borrower’s circumstances and whether any security is available. Talk to us about your requirements so we can source the right business loan for you.
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