Bad credit business loans
A bad credit business loan is finance for a UK company whose credit file carries adverse markers such as a CCJ, a default or a low score. The workable routes are usually secured or income-based products: asset finance, invoice finance, a merchant cash advance or revenue-based finance, where the security does the job a clean credit file would otherwise do. Expect a higher cost or a lower advance than a prime borrower.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's guides and lender reviews.
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At a glance
- What it means
- Finance despite adverse credit markers
- Common markers
- CCJs, defaults, missed payments, low score
- Best routes
- Asset finance, invoice finance, MCA, RBF
- Why they work
- Security or income, not the credit file
- Trade-off
- Higher cost, lower advance, shorter term
- Scope
- Ltd companies, LLPs and partnerships of four or more partners
What counts as bad credit
Lenders assess both the company and its directors, so adverse credit can sit on either side. The most common markers are County Court Judgments (CCJs), defaults on credit agreements, missed or late payments, and a low business or personal credit score. On the company side, a winding-up petition, a Company Voluntary Arrangement or unresolved HMRC arrears carry weight.
On the personal side, a director’s past IVA or bankruptcy is relevant. None of these is an automatic decline. What a lender weighs is how recent and how serious the marker is, whether it has been satisfied, and what else the business can put on the table.
Why a poor credit file doesn't have to end the search
An unsecured term loan relies almost entirely on the credit file, because there's little else for the lender to fall back on. That is why adverse credit hits an unsecured application hardest. The way around it's rarely to argue the markers away; it's to choose a finance type where the lender already holds security or can see the income.
If a facility is secured on an asset, an invoice book or a stream of card and online sales, the credit file becomes one input among several rather than the whole decision.
Finance types that work with adverse credit
These products carry their own security or repay from income, so an imperfect credit file weighs less than it would on an unsecured loan. The exact position varies by lender and by the strength of the deal, so always confirm terms on the specific offer.
| Finance type | What it leans on instead of the credit file | Typical fit |
|---|---|---|
| Asset finance | The asset being funded (equipment, vehicle, machinery) | Buying or refinancing a specific asset |
| Invoice finance | The unpaid invoices / debtor book | B2B businesses invoicing on credit terms |
| Merchant cash advance | Future card-machine takings | Retail and hospitality with strong card flow |
| Revenue-based finance | A share of future online sales | Ecommerce sellers on Shopify, Amazon, Stripe |
| Secured / bridging | Property or a fixed charge over assets | Businesses with property to secure against |
Source: FundBiz product structure overview
View as plain-text Markdown
### How each route handles adverse credit and what it leans on instead of a clean file. Position varies by lender and deal; confirm on each offer. | Finance type | What it leans on instead of the credit file | Typical fit | | --- | --- | --- | | Asset finance | The asset being funded (equipment, vehicle, machinery) | Buying or refinancing a specific asset | | Invoice finance | The unpaid invoices / debtor book | B2B businesses invoicing on credit terms | | Merchant cash advance | Future card-machine takings | Retail and hospitality with strong card flow | | Revenue-based finance | A share of future online sales | Ecommerce sellers on Shopify, Amazon, Stripe | | Secured / bridging | Property or a fixed charge over assets | Businesses with property to secure against | Source: FundBiz product structure overview
For equipment and vehicles, asset finance is the cleanest route because the asset is the security. For unpaid invoices, invoice finance advances against the debtor book. Card-led businesses can look at a merchant cash advance, and online sellers at revenue-based finance. If you have already had a knockback, see what to do after a business loan decline.
CCJs, defaults and how recency matters
A CCJ is recorded on the Register of Judgments, Orders and Fines and stays there for six years, unless you pay it in full within one calendar month of judgment, in which case it can be removed. A satisfied or older CCJ is treated very differently from a large recent unsatisfied one.
The same logic applies to defaults and missed payments: lenders care about how long ago they happened and whether the pattern has since improved. A business that hit trouble two years ago but has traded cleanly since presents a far stronger case than one still in difficulty today. Bringing evidence of the recovery, such as recent bank statements, helps.
The trade-offs, stated plainly
Adverse credit shifts risk to the lender, and that shows up in the terms. Expect one or more of the following:
- A higher rate to price in the extra risk.
- A lower advance against the asset value or invoice book.
- A shorter term, or more frequent repayments.
- A personal guarantee from a director, and possibly a debenture over company assets.
None of this makes the facility wrong. For many businesses, funding now at a fair risk-adjusted cost is exactly what keeps trading on track. The sensible approach is to compare the total cost across a few options, use the facility to rebuild the credit profile, and revisit cheaper products once the file has recovered.
Protecting your credit file while you search
Repeated hard-search applications can themselves dent a credit file, so the order you do things in matters. FundBiz does not run a credit check. If you send an enquiry, the broker or a lender may run their own checks, and they should tell you before they do. See our UK lender reviews for specialist funders that may engage where mainstream lenders won't.
Frequently asked questions
Can I get a business loan with bad credit in the UK?
Often yes, but usually not as a plain unsecured term loan at the best rate. Where the company or its directors have adverse credit, specialist lenders lean on real security or future income instead of a clean credit file. Asset finance secured on the equipment, invoice finance against the debtor book, a merchant cash advance against card takings, and revenue-based finance against online sales are the routes most likely to complete. Expect a higher cost or a lower advance than a prime borrower would see.
What counts as bad credit for a business loan?
Lenders look at both the company and its directors. Common adverse markers are County Court Judgments (CCJs), defaults, missed or late payments, a low business or personal credit score, an IVA or bankruptcy in a director’s history, and a winding-up petition or CVA on the company.
None of these are automatic declines on their own. What matters is how recent and how serious they are, whether they're satisfied, and what else the business can show, such as steady turnover or an asset to secure against.
Does a CCJ stop me getting business finance?
Not necessarily. A satisfied CCJ, or a small, older one, is far less of an obstacle than a large recent unsatisfied judgment. A CCJ stays on the Register of Judgments, Orders and Fines for six years unless you pay it in full within one calendar month of the judgment, in which case it can be removed. Specialist lenders will still consider a business with a CCJ, particularly where the facility is secured on an asset or on invoices rather than on the credit file alone.
What finance types work best for a business with bad credit?
The products with their own security are the most reliable. Asset finance is secured on the asset being funded, so the asset does much of the work an unsecured lender would want the credit file to do. Invoice finance advances against your unpaid invoices. A merchant cash advance and revenue-based finance lean on future card or online sales. Because the lender can see and recover from that security or income, adverse credit weighs less heavily than it would on an unsecured loan.
Will a bad credit business loan cost more?
Usually, yes. A lender carrying more risk prices it in, so expect a higher rate, a lower advance against the asset or invoice, a shorter term, or a personal guarantee. That is the trade: access to funding now, at a cost that reflects the risk. It is worth comparing the total cost across a few options rather than taking the first yes, and treating the facility as a step toward rebuilding the credit profile rather than a permanent arrangement.
Does checking eligibility affect my credit score?
FundBiz does not run a credit check. If you send an enquiry, the broker or a lender may run their own checks, which can include a credit search, and they should tell you before they do. A full application to a specific lender may involve a hard search, which is recorded, so avoid making lots of applications in a short period.
Can a company in a CVA or with an HMRC arrears get finance?
Sometimes, through specialist lenders, but the situation drives the outcome. A company in a Company Voluntary Arrangement, or with HMRC arrears, has a narrower pool of funders and will usually need to secure the facility on an asset or on receivables. Where an HMRC deadline is the trigger, a Time to Pay arrangement or a facility timed to the tax bill can be part of the answer. These are case-by-case.
Who can send an enquiry through FundBiz?
UK limited companies, LLPs and partnerships with four or more partners. Sole traders are out of scope. Adverse credit doesn't rule a business out on its own; lenders weigh it against trading history, turnover and the security or income the facility is based on. FundBiz does not run a credit check. If you send an enquiry, the broker or a lender may run their own checks, which can include a credit search, and they should tell you before they do.
Check what your business can raise, even with adverse credit
Check your options →FundBiz does not run a credit check. Limited companies, LLPs and partnerships with four or more partners only.
Just been declined?
If a specific application was refused rather than adverse credit being a general concern, start at declined? options by reason instead. It's organised by the exact reason a lender gave, whether that was a CCJ, a missed payment, thin trading history or an affordability ratio, and explains the options that may fit it.