A bad business credit loan is tailored for people with low personal or business credit scores. It’s worth noting that ‘low’ is any score below 500.

Traditional banks are resistant to lending to business owners who have bad credit as they appear less likely to make repayments on time. However, finance brokers can access various exclusive lenders that specialise in funding businesses with poor credit scores.

So, if you’re looking to secure a business loan but are worried about your credit record, it turns out you could be more eligible than you think. Rest assured, in this article we destroy some of the biggest myths surrounding bad credit and commercial finance to help your funding journey.

I Can’t Get a Business Loan

Don’t be so defeatist! If your credit is in a bad place there are still options for getting your business funded.

Finance brokers like Crispcap review multiple aspects of your business when checking your eligibility for a business loan. Along with your credit rating, they look at your last 3-6 months of bank statements and your last set of full filed accounts (if you have filed them) to get a complete understanding of your trading history.

Consistent turnover can outweigh any credit issues you may have. This is because your business has a high likelihood to grow and, in turn, is more likely to pay the loan back on time.

Large and small businesses that show potential to grow their profits can get funded and even improve their credit score with a business loan.

This flexibility is not afforded by traditional banks and can often only be provided by finance brokers who know the market.

The Interest Rate Won’t Work for Me

The interest rate will be higher on a bad business credit loan as there is more risk for a lender that there will be late repayments. But that doesn’t mean that the interest rate won’t work for you.

A bad credit business loan can give companies a cash injection to support new contracts, pay staff wages, and buy essential equipment. Whilst the interest will be higher than average, a business can achieve a great return on investment with a loan that justifies its cost.

Also, repaying a bad business credit loan on time can improve your business credit score. It shows responsible debt management to credit reference agencies (CRA), so you’ll see your credit rating recover.

With an improved score, you can take out future business loans at a lower interest rate and the process repeats itself for a reduced charge. Short-term sacrifice can create long-term benefits, but as a business owner, I’m sure you already know that.

I’ll Never Get the Loan Term I Want

The terms on a bad business credit loan are not hugely flexible but it depends on what you’re looking for.

The loan is usually lent on a short-term basis for up to 12 months. This is because finance brokers struggle to find lenders who want to commit to a long-term payment plan with businesses with poor credit.

Nonetheless, short-term funding allows for a quick and manageable influx of capital that can help with cash flow. It can be a solution for many businesses that don’t want to drain their cash reserves.

Also, committing to a short-term loan now will increase your chances of securing a long-term loan in the future. Keeping up with repayments will improve your credit score and, consequently, open more finance opportunities for you soon.

It Takes a Long Time to Get a Bad Business Credit Loan

A bad business credit loan does not take longer to get than a regular business loan.

A finance broker can get businesses funded in as little as 4 hours. The business owner simply needs to get in touch via a 30-second application form.

After that, the broker will get in touch to ask some questions about the business and request some documents from the owner. These are usually the last 3-6 months of business bank statements and the last set of full-filed accounts. The sooner that these are sent to the broker, the faster the funding process will be.

Requesting a bad business credit loan with a traditional bank is a lengthy process that usually results in a declined application. Finance brokers work speedily by using their network of trusted lenders.

Unlike traditional banks, a finance broker also serves as an expert that you can rely on for quick and tailored guidance.

I’m Not a Homeowner So I Can’t Get a Business Loan

You don’t need to be a homeowner to get a business loan.

For some bad business credit loans, homeowners will use their property as security to get funding for their business. They are more likely to get approved for a loan as lenders rely on the security of their property if the director can’t make loan repayments.

However, a bad business credit loan can also be unsecured which means that it doesn’t require valuable assets like property as protection. Instead, these loans come with a personal guarantee.

A personal guarantee is an agreement between the lender and the business owner(s) that states they are responsible for the loan if their business folds. It’s faster to get funded with an unsecured loan than a secured loan as there is no requirement to check the value of any assets. Finance brokers can check your eligibility for an unsecured business loan by simply reviewing your bank statements and filed accounts.

An unsecured bad business credit loan can help business owners get funding. This is true even if they don’t have assets to support their application.

Get Started With a Bad Business Credit Loan

Having a bad credit score does not destroy your chances of getting your business funded.

Whilst traditional banks are restrictive and calculated in their approach to distributing business loans, finance brokers are more flexible in their funding process. They review businesses by considering their potential to earn and their previous profits.

They can arrange a bad business credit loan that accelerates the growth of your business and improves your credit score. They unlock the potential for future earnings and more flexible finance options.

If you’re looking for a business loan but are worried about your credit rating, Crispcap arranges loans tailored to businesses like yours. Get started here. Our initial review does not affect your credit score.