Business Loans With Bad Credit And No Collateral
With up to 9 in 10 small businesses failing, it’s no surprise that many businesses and business owners have bad credit. In fact, business owners with poor credit make up a large proportion of or our enquiries and we always try to help.
You may be surprised to learn that directors looking for business loans with bad credit and no collateral, may still be able to raise finance. Of course, this likelihood of being accepted and granted a loan depends on multiple factors. These main factors include:
The age of the business. If your business has a trading history, even if it’s just a couple of months worth of PayPal statements, there may be hope. Ideally, we would like to see 6 months + of bank statements. However, we can often persuade lenders to make an exception.
Your business is profitable. If you’re able to show continued and sustainable growth, lenders will unsurprisingly be more open to lending your business money. Being able to clearly demonstrate that you’re making a profit and that profit is due to grow gives you a much greater chance to borrow. This is often against the advice of your tax planner though.
The reason for the loan. If you are desperate to borrow to stop your business failing, it is much harder to borrow than compared to if you want to buy a new piece of equipment or stock.
Up to date on your tax returns and payments. Most lenders will want assurances that you are not amassing a large HMRC debt. HMRC bring more insolvency proceedings than anyone else in the UK and are often unwilling to negotiate. Your lender will want to make sure there is little danger of this happening.
Length of time since your last CCJ, Default or Arrears. If you can show that your previous credit black mark was 6, 12, 24, 36 months ago, you can stand a good chance. The longer ago the black mark happened the better. We can help build a picture of you and your business getting stronger if there are no very recent issues.
You’re borrowing to buy new equipment. Some lenders love collateral. If you’re borrowing for a new piece of equipment, you may have an easier time borrowing. If you do not keep up repayments, the lender will sell on the debt and may repossess the item. This allows them to make some of their money back.
If you have experienced a bad credit event and would like to still apply for finance, contact us. Please visit our Enquiry page fill in your details and one of our experienced consultants will be in touch to discuss your options.