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Bad or Adverse Credit Business Loans

Looking to grow your business? Or just need a little extra working capital to keep your business moving? 

Our small business loans are available between £5,000 – £500,000 for almost any purpose.

We’re not a bank. Our lending criteria is different, and we look at more than just your credit profile.

Check your eligibility online in just two minutes, with no impact on your credit score, and you could receive your funds in as little as 24 hours.

How does the business loan work?

Unlike a traditional loan, Capify’s is paid back in very small amounts regularly. The repayments are completely automated so you don’t need to do anything. Many business owners love our regular payments, because they don’t have to save a large amount by a fixed date each month.

To be eligible for a business loan, you'll need to:

  • Turnover >£10,000 per month
  • Have at least 12 months’ trading records

The benefits of a Capify business loan

  • Raise from £5,000 - £500,000
  • Pay back little and often
  • No monthly lump sum
  • Opportunity to raise more funds

You Can Get a Small Business Loan – Even With Poor Credit

Capify have over 14 years’ experience of providing short-term funding for small businesses that traditional mainstream lenders regularly turn down.

We look at different application criteria than a bank and will consider all credit profiles.

Our lending is quick and straightforward, and you could receive your funds in as little as 24 hours.

To see if your business is eligible for a loan of £5,000 – £500,000, just tell us about yourself and your business, and we can give you a quick decision with no impact on your credit score.

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What is a bad credit small business loan?

Bad credit business loans are granted to companies that are considered to have a heightened risk of being unable to fully or promptly repay their debts. Financial institutions, lenders, and suppliers evaluate a business’s creditworthiness based on its past payment performance, considering various factors like the amount borrowed, repayment frequency, and the timeliness of settling debts. These critical aspects help determine whether a business qualifies for bad credit loans, as they indicate the level of risk associated with providing financial assistance to the company.

Running a business can be a pricey venture. All businesses need cash, and particularly in the early days, you need to spend money to make money. Poor credit can be a real problem. Even an issue as seemingly small as one missed payment due to extenuating circumstances such as an expired credit/debit card can cause some lenders to turn away, even from long-established businesses.

However, there are still providers that will help out with small business loans with poor credit customers, by moving past traditional lending methods.

What is a bad credit small business loan? Put simply, it’s a loan which allows small business owners to get the funding they need, without their credit history being a huge obstacle. Poor credit business loan providers look beyond the basics to help you borrow the amounts you really need.

Getting a small business loan with poor credit

There are many reasons small business owners or those wanting to start a business might have bad credit. There may be an old CCJ that’s been paid but still not expired. Or it could simply be that too much was borrowed over a short space of time. A credit history is just that: History. We look at your current cash flow as well as what’s happened in the past, so we’re using what’s happening right now to determine the risk in lending money. Businesses with bad credit often believe that they can only apply for traditional loans. Thankfully, there are plenty of alternative options available allowing businesses to get the funding they need.

Types of loans available if you have poor or bad credit

Our business loans take into account your current business performance. We look at how you’re doing day to day, which is how you run your business- in the present. We also consider how many card payments your business is taking daily, and use this to consider how much we might lend you, possibly as a merchant cash advance. Merchant Cash Advances (MCAs) move away from traditional loans completely, avoiding the expected repercussions of bad business credit.

What can poor credit small business loans be used for?

What can you use a small business loan for? Anything you need. Businesses often need funding for expansion or investing in new projects. You might need funding to get specific inventory items in that you know are going to sell well. You might need specialist equipment to take your business to the next level. Or it could just be a case of keeping cash flow moving for essentials like utilities, paying employees or rent for business premises.

What are the advantages of a poor credit business loan?

There are many advantages to the alternative methods of lending. A bad credit small business loan means you can stop being held up by your credit history. It means you can get the funding you need to make your business dreams a reality. It means you can stop having multiple credit searches done with traditional loan providers- which can damage your credit rating further. Also, some alternative methods of lending have shorter terms on, which can be beneficial for new businesses not in a position to make long term commitments. It can also be easier and quicker to access the funds once you have successfully applied for a bad credit business loan. Many applications are fully online, keeping it safe and simple.

What are the disadvantages of poor credit business loan?

One of the questions small businesses have is, are there any disadvantages to a bad credit business loan? Well, they can end up costing more overall. As with any loan, it’s always crucial to ensure you can afford any repayments, and that it’s cost-effective in the long run.

 

Will I need to put up security for a poor credit small business loan?

Another common concern is whether business owners will have to put up security for a poor credit business loan. This isn’t necessarily the case, though. Sole traders, in particular, can be held personally liable for missed payments rather than having to put up collateral that would be reclaimed by the lender. Higher rates of lending also reduce the need to provide collateral. For limited companies, there’s also the option to offer a personal guarantee in certain circumstances. Speak to a specialist to find out which options will work best for you and your business needs.

Reluctance of Traditional Lenders for Businesses with Bad Credit

Conventional lenders, like banks and credit unions, adhere to stringent lending criteria to safeguard their investments from potential risks.

At Capify, we take pride in our human-driven decision-making process for funding, as we understand that every business’s financial situation is unique, even if it’s not perfect. Unlike relying on algorithms for approval, we thoroughly assess businesses with poor credit and provide them with a higher chance of receiving the necessary funding compared to traditional banks.

When dealing with businesses exhibiting bad credit, lenders perceive them as riskier borrowers, leading to the following obstacles in obtaining loans: 

  1. Limited Loan Options and Higher Interest Rates: Businesses with bad credit often face a scarcity of available loan options, and the loans that are accessible typically come with higher interest rates. These elevated interest rates aim to offset the increased risk posed to the lender, if the loan is granted. Should they deem your creditworthiness to not be sufficient, it’s likely lenders will outright refuse to allow you to borrow from them.
  2. Increased Risk and Collateral Requirements: Lenders may require additional collateral or guarantees when dealing with businesses with bad credit. This collateral provides a safety net for the lender in case the business defaults on the loan. Typically, if the lender requires collateral or assets in order for the business to be funded, it’s referred to as a ‘Secured Business Loan.’
  3. Impact on Business Growth and Opportunities: Limited access to financing can hinder a business’s growth and expansion prospects. Without adequate funding, businesses may struggle to invest in new projects, hire additional staff, or purchase necessary equipment.

     

In these situations, businesses with bad credit might feel stuck, unable to access the funding they need to grow and expand the business, which is often the start of a financial death spiral. However, we can offer alternative funding options available to help these businesses overcome these challenges and achieve their goals, regardless of bad credit or CCJs. 

Will I need to put up security for a poor credit small business loan?

Another common concern is whether business owners will have to put up security for a poor credit business loan. This isn’t necessarily the case, though. Sole traders, in particular, can be held personally liable for missed payments rather than having to put up collateral that would be reclaimed by the lender. Higher rates of lending also reduce the need to provide collateral. For limited companies, there’s also the option to offer a personal guarantee in certain circumstances. Speak to a specialist to find out which options will work best for you and your business needs.

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Pros & Cons of Bad Credit Business Loans

Pros of Bad Credit Business LoansCons of Bad Credit Business Loans
Access to Funding: Helps businesses with poor credit access the necessary funds for growth and operational needs.Additional Fees: Some bad credit loans may come with additional fees, such as origination fees or processing charges, increasing the total cost of borrowing.
Flexible Eligibility: Some lenders offer more lenient eligibility criteria, allowing businesses to qualify despite credit issues.Collateral Requirements: Some lenders may require collateral to secure the loan, posing additional risks for the borrower.
Potential for Credit Improvement: Responsible repayment of these loans can gradually rebuild a business’s credit standing over time.Higher Interest Rates: Bad credit loans often come with higher interest rates to compensate for the perceived risk of lending to bad credit borrowers.
Quick Funding: Bad credit business loans may offer faster approval and funding compared to traditional lenders.Impact on Credit Score: Defaulting on bad credit loans can further damage a business’s credit score, exacerbating the credit challenges.
Business Growth Opportunities: Access to funds can enable businesses to pursue growth opportunities and expand operations.Limited Loan Amounts: Bad credit may limit the loan amounts available, which might hinder ambitious growth plans.
Diverse Loan Options: Various types of bad credit business loans are available, offering tailored solutions for different business needs.Predatory Lenders: Businesses with bad credit may be susceptible to predatory lending practices, leading to unfavorable terms and potentially harmful debt traps.
Financial Flexibility: Funds can be used to cover various business expenses, providing financial flexibility.Shorter Repayment Terms: Bad credit loans may come with shorter repayment terms, leading to higher monthly payments and potential financial strain.
Alternative to Traditional Lenders: Bad credit business loans offer an alternative funding source for businesses facing difficulties with traditional lenders.Potential for Loan Scams: Businesses seeking bad credit loans must beware of potential loan scams and ensure they work with reputable and credible lenders.

Bad Credit Business Loan FAQs

If you have bad credit, certain lenders may offer loan packages just for you. The advantage of this is that you still get access to a potentially very helpful small business loan, even if you have some black marks in your financial history. The downside is that you will be considered a higher risk, so there will almost certainly be restrictions applied to the loan. You may also have to provide some evidence of how you intend to keep up the loan repayments. Read more about bad/adverse credit business loans

Businesses or business owners with poor credit histories can receive financing through bad credit business loans. It is common for business loans with less-than-perfect credit to be secured against property or to require a cosigner. At Capify, as we judge each application on its own merit, we don’t require any collateral in order to fund so long as your business meets our simple criteria.

Having a poor credit score doesn’t mean you can’t obtain a business loan. You just need to meet certain criteria in order to be considered. Capify judge each application on its own merit, meaning that even if you’ve been refused funding in the past for bad credit, we can still help fund your business.

You must be a UK-based business and have at least 12 months of trading history to qualify, regardless of your credit history.

Please reach out to us if you would like to apply for a business loan with bad credit. We treat each application on its own merit, we can fund you even if you’ve been denied a business loan before. Just follow these steps and we can help you obtain a business loan with bad credit:

  1. Check your eligibility. As long as you’re a UK-based business that’s been in operation for at least 12 months you can be pre-approved. This WON’T affect your credit rating.
  2. Answer a few questions related to your business and turnover.
  3. That’s it! You’ll instantly know if you’ve been pre-approved for a business loan, even with bad credit. Get started now.

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