Can I get a business loan with bad credit?
It can feel daunting applying for a business loan if you’ve had bad credit in the past. Bad credit business loans do exist,and your application doesn’t have to end in a declined decision. Newer loan types mean that lenders can now offer finance solutions to those with a less than squeaky clean credit file. If you’re looking to further your business and want to see what business loans are available for those with poor credit, continue reading.
How can I get business finance with bad credit?
Traditional methods of visiting the bank for a business loan tend not to be an option for businesses who have suffered from credit problems in the past. The decision for lenders to grant you a loan will depend on the severity of your financial history and the type of loan you’re applying for. That’s why it’s a good decision to seek help from a funding partner,like Aurora Capital,when applying for business funding with bad credit.
Due to the flexibility of borrowing online compared to traditional methods, lenders can now offer alternative loan options. This means it can be much easier than ever before to obtain a loan even if you have a bad credit history for your business. A growth in these lenders also means you have more options available to you.
Government grants and initiatives are also available for businesses who are trying to get back on track and grow after times of hardship. This includes start up loans for bad credit. Remember to seek advice from these organisations before assuming there are no funding options available to you.
What will lenders look for when reviewing my application?
There are certain checks that most lenders must go through before granting any funding. These checks give them a general idea of your financial status as a business and help them to determine whether you will be a trustworthy borrower.
You can read more about what lenders look for when determining a funding decision in this post.
This may sound daunting, but as we’ve discussed, there are new finance options available for businesses with all different credit histories. This is where the help from Aurora Finance can come in, as we have relationships with lenders and can help match you with the right company to get you the best bad credit business loan available to you.
Here are some of the aspects that lenders look for when deciding on whether to approve your loan:
- Public company data –One of the easiest ways lenders can make an initial assessment of your business is by looking at your visible financial performance such as your net worth and the amount of cash held in your business.
- Business CCJs –CCJs will usually signal a red flag to lenders, especially if you’ve had more than one or a few over a short space of time. However, there are ways you can improve your image to lenders and having a CCJ doesn’t automatically mean a declined decision. Read more on CCJ loans for businesses.
- Winding Up Order –If your business has gone into liquidation in the past, having this order on your credit file can affect your finance applications.
- Recurring Director failures –If the company director has had more than one previously failed businesses, lenders can be influenced by this during their decision, regardless of the current business’ performance.
- People involved with the business –If individuals within the business (partners etc.) have bad credit histories, this can also influence lender decisions.
Which types of business finance can I get for bad credit?
We work with multiple partners who are willing to offer financial solutions for businesses and start up businesses with bad credit. There may be a few different types of loans available to you, all with different pros and cons.
Asset finance offers security against your business assets such as equipment, machinery or commercial property. Lenders are more likely to offer funding in situations where loans can be secured against items, as it offers them more reassurance than it would for an unsecured business loans.
Invoice finance takes into account your financial status as a whole, releasing capital tied up in currently unpaid invoices. If your business is functioning smoothly but is waiting for invoices to be paid in order to clear debts, lenders may look past a bad credit history to provide you with this solution. Invoice finance for businesses with bad credit can be a fantastic solution, but it’s worth speaking to an adviser to gain more information and knowledge on this type of funding.
Peer to peer lending for bad credit
Peer to peer lending is a newer form of lending which offers loans provided from multiple lenders. It is possible to get peer to peer loans with bad credit, but the interest rates are often higher. However, these rates can still be lower than on some traditional bank loans, especially if you have poor credit.
For further information on bad credit business loans in the UK, speak to one of our advisers and we can see which options are available to you. Call us on 01371 870815 or firstname.lastname@example.org.