If you have a business with a bad credit rating, you can still get a loan. There are business loans for bad credit in the UK. These loans can either be secured or unsecured and usually attract high-interest rates. You may also need a guarantor to get the loan. These measures are put in place to reduce the lender’s risk. In this article, we will look at how you can get a business loan with bad credit and a list of lenders that can help you get a business loan in the UK.
Types of UK Business Loans with Bad Credit
- Merchant Cash Advance. Businesses that accept credit card and debit card payments can get Merchant cash. Businesses can repay this kind of loan from the payments made by customers through debit or credit card payments.
- Secured business loan. For these kinds of loans, your business will need to give a property or asset as a guarantee for the loan. In case your business is unable to repay the loan, the asset can be seized to repay the loan.
- Unsecured business loan. This kind of loan does not require collateral. It is a fast way to receive a cash injection to your business.
- Asset finance. This is a secured business loan. A business would need to get a business loan against an asset like machinery then it is allowed to release its equity.
- Invoice Finance. This is a kind of loan where a business sells its invoices to lenders so that it can get a business loan worth the invoice.
- Peer-to-peer loans. You can get a business loan from p2p loan platforms that connect borrowers and lenders.
- Crypto-backed loans. If your business has a poor credit score in the UK and you own cryptocurrencies, you can take crypto-backed loans.
How to Improve Your Credit Score
- Improve your bad credit in the UK by paying off old debt and make payments on new debt on time.
- Too many loan applications in a short period will negatively impact your credit score.
- Pay your invoices on time as late payments can damage your credit score.
- If your business hasn’t taken a loan before, apply for a small amount of credit to prove your creditworthiness.
- Monitor your credit information regularly to make sure there are no mistakes.
How to Get a Business Loan with Bad Credit
If you are looking for a business loan and you have bad credit, you first need to get a credit score for your business. You shouldn’t have outstanding debts and your business should be in a position to repay the loan. Shop online to get the best business loans deals online. There are many online business lenders and you can compare their rates online. Once you have settled for a business lender, complete an online application. You will need to provide your business details and then wait to hear a decision.
If you have a bad credit score, it means that you have defaulted on your obligations before. It also means that you can do it again. Therefore, lenders will always place a higher interest rate on you. These rates may be as high as 100% in what is known as subprime lending.
List of Best Business Loans for Bad Credit in the UK
If your business has bad credit and you are looking for a loan, consider the following business lenders.
365 Business Finance
365 Business Finance offers unsecured business loans to businesses with bad credit scores. Your business can get a business loan of between £5,000 and £200,000. 365 Business Finance considers your recent debit and credit card transactions to evaluate if it qualifies for the loan. 365 Business Finance has a 90% approval rate and a decision is made within 24 hours. You can apply for the loan online and no security is needed. The loan is repaid through a small percentage of your credit or debit card sales. The loan is repayable within 5 to 10 months.
How to Qualify for 365 Business Finance Loans
To qualify for 365 Business Finance funding, your business must have:
- Been trading for at least 6 months
- Have a monthly credit and debit card sales of at least £5,000
- Your business needs to be transacting with a credit or debit card terminal
- Your business should be registered and based within the UK
365 Business Finance Fees
365 Business Finance does not charge APRs, late fees or interest rates. It charges a percentage of your credit card or debit card sales. The percentage is usually between 5% and 17% of credit or debit card transactions.
Funding Options is a business loan broker in the UK for all types of businesses including those with bad credit history in the UK. You can get an unsecured business loan with APR starting from 2.75% while the average is 6.03%. The loan term is between 1 month and 120 months. They can help you get an affordable loan through their multiple accredited lenders.
How to Qualify for Funding Options Loans
- To qualify for the loan, your business must have been trading for the last 12 months and have a minimum turnover of £60,000
- Fill in the form on the website, you’ll be automatically matched with lenders
- In some cases, Funding Options will call you to get a bit more information about your business and accurately assess your request
Funding Options Fees
Using Funding Options service is completely free. The company doesn’t charge customers a fee. You can use its matching tool, look at your options, or speak to Business Finance Specialists for free. If you choose a lender who accepts your application for a loan, the lender will pay Funding Options a commission. This means that the cost to you is the same as if you had gone directly to the lender.
Boost Capital advances loans to UK businesses with bad credit. You don’t need any collateral since their loans are unsecured. You are allowed to access Boost Capital loans ranging between £3,000 and £500,000. You can apply for a small business loan – a short-term loan with a fixed rate of interest or
merchant cash advance – a short-term cash advance which you pay back as a percentage of your daily card sales.
How to Qualify for Boost Capital Business Loan
When applying for a Boost Capital business loan, you need to meet the following requirements:
- Bank statements for the last three month
- Your business must have been in operation for the last 2 years
- Your business annual turnover must be at least £70,000
- Your business must not have been bankrupt
Boost Capital Fees
It’s free to apply for a Boost Capital business loan. Boost Capital interest rates vary depending on your loan amount, your cash flow, loan duration. Fortunately, the amount you need to pay is fixed. However, daily or weekly repayment amounts are not rigid. These payments entirely depend on your business’s cash flow model.
Fleximize offerssecured and unsecured business loans with bad credit history. Your business can get a loan ranging between £5,000 and £250,000 with an APR of 36.2%. The loan term is between 3 months to 36 months. Fleximize looks beyond bad credit scores and tries to avail finance to loan applications. Fleximize looks at your personal and business credit scores to determine your business’ credit worth. Fleximize goes ahead to look at if you have improved your former negative credit score.
How to Qualify for Fleximize Loan
Your business should meet the following requirements to qualify for Fleximize business loan:
- Have a minimum turnover of £60,000
- Have been trading for at least 6 months
- You qualify for a loan equal to a maximum of two months’ revenue
What is good about Fleximize loan for SMEs in the UK is that there are no early payment fees. Your business will only pay the loan interest for the time you have had the loan. In addition, it offers payment holidays or interest-only repayments for six months. Fleximize interest rates start from 0.9% per month. If you get a loan for the second time, you get a lower interest rate or a cashback of £100.
Capify is a UK business loans with bad credit provider. It offers Merchant Cash Advances (MCAs) to SMEs from £3,500 to £150,000. MCAs are ideal for bad credit businesses in the UK because you repay a certain percentage of your credit and debit card takings at the end of each working day. It also offers business loans from £5,000 to £150,000 whose repayment is completely automated.
How to Qualify for Capify Loans
To qualify for a business loan with Capify, you need to:
- Be either as a sole trader, a partnership or a limited company based in the UK
- Have a trading history over 12 months
- Have a minimum monthly turnover of £10,000
Capify charges processing fees (determined by borrowed amount), monthly service fees and origination fees (where applicable). You only need to make small and regular payments to repay your loan. There is no interest charged and there is no fixed payback period. Moreover, there is no large monthly loan payments.
Liberis Business Cash Advance
Liberis Business Cash Advance offers businesses cash advance of between £2,500 and £300,000. If your business has a poor credit score, Liberis may look at other factors such as business potential of your company and cash-flow. The loan term is usually between 4 months and 12 months. Liberis decides whether it will give you a loan within 24 hours. Once you are eligible and your loan is approved, you will get funding online or over your phone.
How to Qualify for Liberis Loans
To qualify for Liberis loans in the UK, you must fulfill the following requirements:
- Your monthly card takings average £2,500 or more
- You’ve been trading for over 4 months
- You take card payments through one of eligible acquirers: Worldpay, Fiserv (formerly First Data), Lloyds Cardnet or Elavon
A small pre-agreed percentage of daily card transactions automatically pays for your loan. There’s no APR or hidden fees.
CoinLoan is a platform that offers loans to crypto owners. It connects borrowers and lenders. Unlike fiat currency peer to peer platforms, CoinLoan does not check your business credit score in the UK because you will use your cryptocurrencies as collateral for the business loan you apply for. While there is no maximum amount you can borrow, the minimum amount you can borrow is 5000 GBP. The minimum term for the loan is 7 days while the maximum term is 36 months.
How to Qualify for CoinLoan
CoinLoan has very simple conditions for qualifying for loans mainly because it is collateral based. The main requirement is that you need to own supported cryptocurrencies such as Bitcoin and shitcoins such as Ethereum and Litecoin.
There is no pre-determined interest rates. The rates are set by lenders and borrowers. Early loan repayments are accepted without fees.
Summary of Business Loans for Bad Credit in the UK
If your business has bad credit and you are looking for a business loan, you can consider an alternative like a Merchant cash advance. Unsecured business loans with bad credit are expensive due to the high risk for the lender. Opting for a cash advance can be beneficial and avoid too high costs. You can also consider the business lenders above in the UK for bad credit.