1. Can You Get a Start Up Loan with Bad Credit?
Yes, it’s possible to get business start up loans for bad credit, though options are more limited. Lenders assess risk differently, and some focus more on your business plan than your credit score—especially for new ventures.
2. What Counts as Bad Credit in the UK?
You may have bad credit if you:
- Missed loan or credit card payments
- Have County Court Judgments (CCJs)
- Filed for bankruptcy
- Have a low credit score (typically below 580)
- Used payday loans frequently
These can make borrowing harder, but not impossible.
3. UK Start Up Loan Scheme: Still an Option
The UK Government-backed Start Up Loan offers:
- Up to £25,000 per director
- Fixed 6% interest rate
- 1–5 year repayment terms
- Free mentoring and support
While credit checks are performed, applicants with poor credit may still qualify if the business plan is strong.
4. Alternative Lenders for Bad Credit Startups
- Funding Circle: Peer-to-peer loans with flexible underwriting
- Iwoca: Short-term business loans with fast approval
- Capify: Merchant cash advances for retail and service businesses
- Fleximize: Business loans with custom terms for non-prime borrowers
- Kriya (formerly MarketFinance): Invoice financing for cash flow support
These lenders may accept lower scores but charge higher interest.
5. Other Funding Options Besides Loans
- Grants: Non-repayable funds based on location, industry, or personal background
- Crowdfunding: Raise money through online platforms (Kickstarter, Crowdfunder)
- Angel investors: Trade equity for startup capital
- Bootstrapping: Use personal savings or part-time income to launch
- Business overdrafts: If approved by your bank despite your credit
Exploring multiple avenues boosts your chance of success.
6. What Lenders Look For When Credit Is Poor
- A solid, realistic business plan
- Clear repayment ability (income or projected cash flow)
- Trading history (if already operating)
- Collateral or personal guarantees (optional)
- Personal commitment and knowledge of the business
Bad credit doesn’t mean automatic rejection—it just increases scrutiny.
7. How to Improve Approval Odds
- Add a co-signer or guarantor with strong credit
- Offer collateral (equipment, inventory, vehicle)
- Start with a small loan to reduce risk
- Maintain separate business bank accounts
- Be upfront about your credit situation
Transparency and preparation make a strong impression.
8. Things to Watch Out For
- High interest rates (APR over 30% is common)
- Short repayment periods
- Hidden fees or penalties
- Unregulated lenders
Always review the terms before signing.
9. Does a Bad Credit Loan Affect Your Credit Further?
Yes—positively or negatively. On-time payments can help rebuild your credit, while missed ones can worsen it. Choose affordable repayment terms and budget carefully.
10. Final Thought: You Can Start a Business Despite Bad Credit
Bad credit doesn’t block your path—it just changes the route. With determination, planning, and the right lender, you can still secure the funding needed to launch and grow your dream business in 2025.
Frequently Asked Questions
1. Can I get a start up loan with a CCJ?
Yes, but your chances improve if the CCJ is settled or older than 6 years.
2. Do I need a guarantor for a bad credit business loan?
Some lenders require it; others assess the business model instead.
3. Is the Government Start Up Loan available to those with bad credit?
Yes, depending on your full application. Each case is reviewed individually.
4. Can I get funding without a credit check?
Some options, like crowdfunding or grants, don’t require a credit check.
5. How much can I borrow with bad credit?
Loan sizes range from £1,000 to £25,000 depending on the lender and risk.
6. How do I apply for a start up loan with bad credit?
Prepare a business plan, gather financial details, and approach lenders that accept poor credit.
Conclusion
Business start up loans for bad credit are real and within reach. By choosing the right funding route and presenting your business confidently, you can overcome credit obstacles and build a thriving venture.