1. Understand Your Credit Situation First
Start by checking both your personal and business credit scores. Use UK services like:
- Experian
- Equifax
- TransUnion
Identify what’s dragging down your score—missed payments, defaults, or CCJs—and take steps to improve it if possible.
2. Consider Government-Backed Start Up Loans
Even with bad credit, you might qualify for a UK Start Up Loan, especially if:
- Your business is under 3 years old
- You’re over 18 and live in the UK
- You have a viable business plan
These loans offer up to £25,000 at a fixed 6% APR—even for applicants with weaker credit profiles.
3. Explore Bad Credit Business Loan Providers
Some UK lenders specialise in bad credit business loans, including:
- Capify
- Nucleus Commercial Finance
- Fleximize
- Boost Capital
These lenders may offer unsecured loans but expect higher interest rates and stricter repayment terms.
4. Offer Collateral or a Personal Guarantee
To offset credit risk, some lenders accept:
- Asset-backed loans (using property, vehicles, or equipment)
- Personal guarantees, where you take personal responsibility for repayment
This lowers risk for lenders and increases your chances of approval.
5. Apply with a Co-Signer or Business Partner
If you’re working with someone who has better credit, applying together can:
- Improve loan approval odds
- Unlock better rates
- Share the responsibility
Ensure both parties understand the risks and responsibilities.
6. Focus on Short-Term or Alternative Loans
Other options for bad credit borrowers include:
- Merchant cash advances
- Invoice financing
- Business credit cards
- Revolving credit facilities
These provide flexible funding, though costs can be higher and linked to business turnover.
7. Build a Strong Business Case
Lenders look beyond credit scores. Strengthen your application with:
- A detailed business plan
- Cash flow projections
- Evidence of sales or contracts
- Testimonials or client reviews
Show you’re a responsible borrower with a plan for success and repayment.
Frequently Asked Questions
Can I get a business loan with a credit score under 600?
Yes, but options may be limited to specialist lenders or government schemes. Expect higher interest rates.
Will applying for multiple loans hurt my credit?
Yes. Multiple hard checks can reduce your score. Use comparison tools that do soft searches.
Can I improve my credit while running a business?
Yes. Pay bills on time, reduce debts, and avoid maxing out credit limits. Gradually, your score will rise.
What’s the best loan for bad credit UK businesses?
The Start Up Loan scheme is ideal. Otherwise, look at secured loans or trusted alternative lenders.
Can I get a business loan if I’ve been declined before?
Yes. Wait before reapplying, review your credit report, and consider different lenders or funding types.
Are there any grants for businesses with bad credit?
Yes. Grants don’t require credit checks, so explore local authority and sector-specific funding.
Conclusion
Knowing how to get a business loan with bad credit opens the door to funding your business ambitions—even when traditional routes seem closed. By understanding your credit, exploring specialist lenders, and presenting a strong case, you can secure the support needed to grow or launch your venture in 2025.