Can you get a business loan with bad credit
Jack Richings

Jack Richings

Can You Get A Business Loan With Bad Credit?

Banks are unlikely to offer financial support if you had bad credit, but there are other solutions. Can you get a business loan with bad credit? Find out here.

You have a fabulous business idea that you want to capitalise on and have everything in place to give it your best shot, but then you are left with the question: can you get a business loan with bad credit? No-one is perfect, and no matter your circumstances you are not alone when it comes to being left with bad credit. From being unable to meet your repayments to borrowing beyond your means, you don’t want a bad credit score to stop you from achieving your dreams. Here’s everything you need to know about whether you can get a business loan with bad credit.

What Is Bad Credit?

What exactly is bad credit and how does it affect you? Everyone has a credit score, which takes into account a number of factors from your borrowing history. These are all used to give you a credit score. The only way to know where you stand is to request to see your credit score. This will show you how your credit history is being presented to potential lenders and also gives you the opportunity to correct any mistakes.

business loan bad credit

Here are some of the things to look out for:

  • Bankruptcy: as you would expect, this doesn’t look favourable on your credit report. It can remain on your file for up to five years.
  • Debt agreements: this is between you and a creditor, where you enter into an agreement to settled any outstanding debts.
  • Defaults: if you default on a loan and are unable to repay it, this will be listed on your credit score.
  • Missed payments: even the simple act of missing a payment can show up on your credit score and affect it.
  • Multiple inquiries: while it is a great idea to shop around when you are taking out a loan, too many hard inquiries can be marked on your credit score. To avoid this, shop around in a short period of time.

If you have a bad credit score or any black marks against your name, this will raise red flags with a potential lender. But this still begs the question: can you get a business loan with bad credit?

bad credit business loan

Can You Get A Business Loan With Bad Credit?

Now that we understand what bad credit is and how it can affect our potential to take out future loans, let’s head back to that business idea and look at any available options. Can you get a business loan with bad credit? It is highly likely that traditional lenders such as banks, won’t be interested in taking you on. But this doesn’t mean you don’t have alternatives.

Some lenders offer something called bad credit business loans, designed for people in your situation. Essentially, you aren’t alone when it comes to having a bad credit score and getting knocked back by the banks. When it comes to taking out a loan for your business, you may find yourself in one of two positions:

  1. Start-up businesses: if you are a start-up business, then the loan will be relying on your personal credit score. If your credit score is low then a bad credit score may be your best option.
  2. Established businesses: if you run an established business then you will have your own business credit score, separate to your own. If you still have bad credit here, then the bad credit loan will be the best option. If not, you may find you have more luck with banks and other institutions.
what is bad credit

What Is A Bad Credit Loan?

Bad credit business loans are short-term loans that are designed to help businesses or individuals with bad credit get access to a loan. Naturally, you are the business are deemed as a higher risk to the lender, so this type of loan does come with its downsides. The interest rate is often higher, which means you end up repaying more over the course of the loan. They can also come with higher fees attached to them.

At the end of the day, if you are needing the access to cash to help you get your business up and running or to expand, then this is a great way to go about it. Just make sure you are set up financially to repay the loan over time, so you don’t find yourself or your business spiralling further into bad credit. So if you were still wondering can you get a business loan with bad credit; the answer is yes!

Taking Out A Business Loan

It is always a good idea to get a second opinion when it comes to taking out a business loan. The team at ALC Commercial can look at your individual circumstances and advise you on the best steps to take to ensure financial success for you and your business. Get in touch today and don’t let your bad credit stand in the way of your business success.

For more information on business loans, commercial finance, debt consolidation, bad credit business loans and low-doc business loans talk to our experienced and understanding loan specialists to see how our business loans can support your business goals.

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