Can You Get a Business Loan With Bad Credit?
You can, and more easily than the high street suggests. Specialist lenders underwrite on your recent trading and cash flow, not just your credit score, so a CCJ or default doesn’t end the conversation.
The high-street banks will likely decline you on a weak credit file. Alternative lenders like iwoca and Capify read your bank statements and card takings instead, and price the extra risk into the rate.
That’s the catch you accept for a yes.
You’ll have your accountant upload three months of statements on a Friday, and the lender reads the trading, not the score.
Types of Finance You Can Get With Bad Credit
Your options narrow with bad credit, but they don’t close. The trick is to pick finance that leans on something other than your credit score, your assets, your invoices, or your daily card takings.
That’s the menu a weak file still leaves open to you.
Which Lenders Accept Bad Credit
Your best starting point is a lender that weighs your cash flow over your credit score. Capify considers CCJs and adverse credit, lending from £5,000 to businesses with 12 months’ trading and £10,000 a month of turnover.
iwoca reads your business account through Open Banking, with no fixed trading-history minimum, so a thin or patchy file isn’t an automatic no. Its representative APR is 49% across £1,000 to £1 million.
If you take card payments, 365 Finance advances against your takings on a merchant cash advance with only a soft search, so checking your offer leaves no mark on your credit file.
A secured loan is the cheapest route with bad credit we’ve found, because the asset lowers the lender’s risk. Put up property or equipment and you can reach rates from 6 to 10%, well below unsecured bad-credit pricing.
That’s the gap your asset closes.
What Bad Credit Costs You
You’ll pay more for the same money, and it’s worth knowing how much. Your APR runs 8 to 15% on the high street, 15 to 50% or more from alternative lenders, and a merchant cash advance higher still.
A merchant cash advance repays as a slice of your daily card takings, priced as a factor rate rather than an APR, so the effective cost lands between 40 and 90%.
On a £20,000 advance at a 1.3 factor rate, you repay £26,000 whatever the speed. That’s what a weak credit file costs you.
The Bank of England base rate sits at 3.75%, the floor every lender builds on.
How Lenders Read Your Credit Files
Lenders check both your business credit file and your own personal credit file as director or owner. A CCJ or default on either can raise your rate or trigger a decline.
Which file carries more weight depends on your structure. As a sole trader your personal file is the application; as a limited company the business file leads, but a personal guarantee pulls your own credit back into the decision.
A CCJ and a default each stay on your file for six years, though a CCJ drops off if you pay it in full within one calendar month. Older marks weigh less than recent ones.
Active bankruptcy, a Debt Relief Order or an IVA will rule you out of most lending, including the Start Up Loans scheme.
Your accountant emails you the credit report to read before you apply at month-end. That’s the history you can’t hide from underwriting.
How to Improve Your Approval Odds
You can shift the odds before you apply, starting with a soft-search eligibility check that leaves no footprint. iwoca, Capify and others offer one, so you see your likely odds without a hard search.
Borrowing a smaller amount, offering security, or adding a personal guarantee all lower the lender’s risk, and each is among the surest ways to lift your chance of a yes. Each one gives the lender a reason to look past the file.
Fix errors on your credit file before you apply, because they’re more common than owners expect. Check your file at Experian, Equifax or Creditsafe and dispute anything wrong.
Your accountant chases a default correction with the agency while you wait on the application. That’s the work that turns your no into a maybe.
We’d line these up before applying, not after a decline, so the soft check meets a stronger file.
What to Do If You Are Turned Down
You’ve still got moves after a no. Ask the lender why you were declined, because a fixable reason like a thin file or a recent missed payment often points straight at your next step.
Your next move can be a soft-search marketplace like Tide Funding Options, which matches you to lenders that fit your profile and spares your file a string of hard searches. Invoice or asset finance, we find, can also clear where a straight loan won’t.
If nothing lands now, you can borrow smaller, offer security or a guarantor, and rebuild your credit file for a few months. That’s the delay that buys you a cheaper yes.
We’d fix the trigger before reapplying blind: the same weak file twice just adds two hard searches.
Bad Credit Business Loan FAQs
Can I get a business loan with a CCJ?
Often yes. Specialist lenders such as Capify explicitly consider applicants with CCJs, underwriting on current trading and cash flow rather than the credit score alone. A CCJ usually means a higher rate or a smaller facility, and a recent or unsatisfied judgment weighs more heavily than an old, paid one. A secured loan, where an asset backs the borrowing, gives you the best odds with a CCJ on file.
How long do CCJs and defaults stay on my credit file?
Both stay on your file for six years from the date they’re registered. A CCJ is the exception: if you pay it in full within one calendar month of the judgment, it’s removed from the register entirely. Paying a CCJ after that month marks it as satisfied rather than removing it, which still looks better to lenders than an outstanding judgment.
Whose credit matters, mine or my company’s?
Usually both. Lenders read your business credit file and the personal credit file of the main director or owner together. As a sole trader you have no legal split, so your personal file is the application. As a limited company the business file leads, but almost every lender asks for a personal guarantee, which brings your own credit history back into the decision.
How much can I borrow with bad credit?
Less than with a clean file, and usually at a higher rate. Specialist unsecured lenders go up to around £1 million in principle, but a weak credit profile tends to pull the offer down and the price up. Securing the loan against an asset, or borrowing against invoices or card takings, is the most reliable way to access a larger sum despite adverse credit.
Will applying for a bad-credit loan hurt my credit score?
A full application leaves a hard search that other lenders can see for 12 months, and several in a short window can lower your score. A soft-search eligibility check leaves no visible footprint, so use one to gauge your odds before you commit to a full application. iwoca, Capify and several others offer a soft check up front.
Are no-credit-check business loans real?
Be wary of the phrase. A regulated UK lender will always run some form of check, so a genuine product usually means a soft search at the quote stage and a focus on cash flow rather than a hard cut-off on your score. An outright promise of no checks at all is a red flag for a scam or an unregulated lender, and worth avoiding.
Does repaying a bad-credit loan improve my credit score?
Yes, over time, as long as the lender reports to the business credit bureaus, because not all of them do. Where the lender reports, making every repayment on schedule is recorded on your business credit file and steadily rebuilds it, which can unlock cheaper finance on your next application. The reverse is also true: a missed payment does fresh damage, so only borrow what the cash flow can comfortably service.
Can I get a Start Up Loan with bad credit?
Possibly, as the British Business Bank Start Up Loans scheme assesses affordability rather than applying a hard score cut-off, and it lends at a fixed 7.5% with no security. However, you’re ineligible if you’re in active bankruptcy, subject to a Debt Relief Order, or in an Individual Voluntary Arrangement. A recent default or CCJ doesn’t automatically disqualify you.
How we reviewed this
What we covered. This guide explains how this product type works for UK businesses, drawing on FCA guidance, Bank of England publications, and lender documentation. We do not draw on comparison site summaries or aggregator data.
Data sources. All claims were checked against primary sources in April 2026, including provider websites, FCA guidance, and Bank of England publications. We do not cite comparison site summaries or affiliate aggregator data.
Update cadence. We re-verify this page at least monthly, and whenever a provider changes pricing, eligibility, or terms. The verification date on the page reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Credit products are subject to status and approval. Compare offers directly with providers before you apply.