Your Guide to Getting a Business Loan with a Low Credit Score

A New Path to Funding 

Securing funding is a critical step for any business, whether you’re a startup looking for a launch pad or an established company planning to expand. However, if your business has a low credit score, the traditional lending route can seem like a dead end. The good news? A less-than-perfect credit history doesn’t have to be a barrier to growth. This guide will provide clear answers and a practical roadmap to help you navigate the world of bad credit finance and find a suitable solution for your business in the UK. 

Understanding Your Business Credit Score 

Before you look for a loan, it’s crucial to understand where you stand. Your business credit score is a reflection of your company’s financial health and its history of repaying debts. Different credit agencies use different scoring models, but they all provide a measure of your creditworthiness. 

What is a low credit score for a business in the UK? In the UK, a “low” or “poor” business credit score typically falls into the lower tiers of the major credit reference agencies. A score below the “fair” or “good” threshold would be considered low. Here’s a general guide based on common scoring models: 

Credit Agency	Score Range	Credit Rating
Experian	0−50	Very Low
	51−70	Low
	71−80	Fair
	81−100	Good to Excellent
Equifax	0−15	Low to Very Low
	16−30	Fair
	31−50	Good
	51−100	Excellent

A score in the lower ranges indicates a higher risk to lenders, making it essential to look at lenders who specialise in poor credit business loan products. 

The Cost of Bad Credit Loans 

A common concern for business owners is the potential cost of a bad credit loan. While it’s true that interest rates may be higher, understanding why is key. Lenders use a risk-based pricing model, meaning they adjust the interest rate to match the perceived risk of the loan. 

FAQ: Will a bad credit loan have a higher interest rate? Yes, generally a bad credit loan will have a higher interest rate than a loan for a business with an excellent credit score. This is because the lender is taking on a greater risk of default. However, the interest rate should be balanced against the value the funding provides. The goal is to find a fair rate that allows your business to grow and manage the repayments comfortably. The figure below illustrates the inverse relationship between credit score and average interest rate. 

Finding the Right Lender: Options for Bad Credit Finance 

The UK market has a vibrant alternative finance sector with many lenders who understand the challenges of a poor credit history. These lenders look beyond the credit score and consider other factors like your business’s turnover, cash flow, and overall viability. For a loans for low credit score, you can explore options like: 

• Short-Term Loans: Smaller loans with a shorter repayment period. 

• Merchant Cash Advance: Funding based on your business’s card sales. 

• Asset Finance: Using existing business assets as security. 

For a personalised and straightforward approach to a business loan bad credit UK, visit Fundify Funding. We specialise in connecting businesses with the right funding solution, regardless of their credit history. 

Navigating CCJs and Other Credit Issues 

Sometimes, a low credit score is due to a specific issue, such as a County Court Judgment (CCJ). A CCJ is a court order that can severely impact your ability to get finance. 

Can I get a loan for my business if I have a CCJ? Yes, it is possible to get a business loan with a CCJ, but it is more challenging. Traditional high street banks will almost always decline applications from businesses with a CCJ. However, some specialist lenders are willing to consider your application. They will typically want to know the circumstances behind the CCJ and see evidence that you have a plan to manage your finances responsibly going forward. The key is to be transparent and work with a lender who understands your situation.