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Need business finance but have poor credit?

Published on 17th November 2016 - Last update on 7th January 2020

Any business can find themselves facing financial difficulty at various points in their development. There are many financial challenges that your business can encounter, including CCJ’s and outstanding arrears, all of which can have a negative effect on your credit score. If you’re a business owner suffering from a poor credit score, acquiring finance can be extremely stressful and worrisome.

As a business owner, you may feel as if you’re stuck in the middle of a maze where every twist and turn leads to yet another dead end. Although the situation seems grim, there may yet be other options available or steps you can take to improve your poor credit score, including:

  • Financial performance

When applying for finance, being open about your business’ financial performance can make things run a lot more smoothly. However, before you can borrow money, checks are always carried out to determine your financial situation, plus any other factors that could drag down your credit score. By being upfront about your situation and their causes, you won’t be subject to any undue assumptions.

  • CCJ’s

One of the many factors that lenders, or any other financial institution, will carry out is a check for CCJ’s. If you have one or more CCJ’s outstanding it really is in your interest to pay them, and the sooner the better. As well as checking CCJ’s, they’ll also take into account their worth and how often you receive them.

  • Director’s history

Have you run a business in the past which failed under your term as a director? If so, you need to show that lessons have been learnt, even if you’re running a successful business now. With only 20% of start-ups growing into successful business, these things can easily happen. But before a lender even considers lending you money, they want to have confidence in your business and your ability to make timely repayments.

Most business owners, when facing financial difficulty, turn to their local bank. All too often, they’ll look at your score and, without taking into account the how’s and why’s, will turn you away. But before you decide to cancel any plans you may have, there could be other solutions available to you.

With the rise of alternative finance, the wide scope of financial products available to business owners, even ones with a poor credit score like yourself, is enormous. Alternative lenders know that any business can run into issues so, with this in mind, they’ll tailor financial products to assist businesses at every stage of their development, within reason.

In response to the potential risks, lenders are finding ever more creative ways to boost their own security. For example, if you are looking to acquire a loan, a lender may use your own assets as security. They may also offer you a loan but with higher interest rates and by doing so, this will increase the amount they could potentially choose to offer, within reasonable limits.

At Rangewell, our values are simple – we’re on your side

We support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.

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