Finding a business loan when you have bad credit is more complicated than applying with a clean credit history. If you’re wondering whether you can get a business loan with bad credit, the short answer is yes. Some lenders will still consider you, even if there are CCJs, defaults or late payments on your record. The trade-off is that the products, costs and criteria will usually look very different to standard high street finance.

This guide looks at how lenders view bad credit and what your options look like if you have CCJs or other adverse markers. We’ll also share the main risks to be aware of, and where a specialist broker can add value if you’re comparing offers.

What counts as bad credit for business loans?

Bad credit usually refers to adverse information on your personal credit file, your business credit file, or both.

Personal credit problems:

• Missed or late payments on credit cards, loans, overdrafts or utilities
• Defaults where an account has gone unpaid for a period of time
• County Court Judgments (CCJs), especially recent or unsatisfied ones
• Individual Voluntary Arrangements (IVAs) or bankruptcy
• Maxed-out or heavily used credit facilities, even if payments are up to date

Business credit issues:

• Company credit reports showing registered CCJs against the business
• Arrears with HMRC, suppliers or existing lenders
• Frequent returned or unpaid direct debits from the business bank account
• Signs of persistent cash flow pressure, such as constantly running at the edge of an overdraft

You don’t need multiple issues to be seen as higher risk. Even a single CCJ or default can push you out of mainstream high street lending and into specialist bad credit business loan territory.

The key thing to understand is that lenders look beyond just your credit score. They consider the pattern and timing of any issues, how your business is performing today, and whether the new borrowing looks affordable.

Can you get a business loan with bad credit?

Yes, you can get a business loan with bad credit in many cases. A poor credit score, CCJs, defaults or late payments don’t automatically rule you out, but they do change how lenders view your application and which products are available.

Most business lenders look at a mix of factors:

• How recent the issues are. A CCJ from last year carries more weight than one from five years ago.
• Whether problems are settled or ongoing. Satisfied CCJs and cleared defaults are viewed more positively than unpaid ones.
• How the business is performing now. Turnover trends, profit, cash flow and bank statements can all help offset past problems.
• What security is available. Assets, property or a personal guarantee can sometimes open doors that would otherwise be closed.
• How much you want to borrow and why. Using funding to stabilise or grow a viable business is viewed differently to borrowing just to plug repeated shortfalls.

If your credit issues are more severe or recent, you’re less likely to be approved by a high street bank. Instead, you’ll be looking at a bad credit business loan from a specialist lender, or at alternative products such as asset finance, invoice finance or merchant cash advances.

Read next: What is a merchant cash advance and how does it work?

Loans for people with CCJs

If you’re searching for loans for people with CCJs, it’s still possible to get business finance, but a CCJ is a serious negative mark and it will narrow your options.

Lenders focus on whether the CCJ is satisfied or still outstanding, how recent it is, and what the rest of your profile looks like. A satisfied CCJ from several years ago with clean conduct since is very different to an unpaid judgment from last year alongside other missed payments. Strong accounts and healthy cash flow can also help soften the impact.

Where the wider picture is reasonably positive, you may still be able to access a straightforward business loan from a more flexible lender, particularly if the CCJ has been settled.

If the issue is more recent or there are multiple adverse markers, you’re more likely to be looking at a bad credit business loan from a specialist, with higher pricing and tighter terms. Alternatively, you might consider finance that leans less on your credit history and more on assets, invoices or card takings.

Whatever route you pursue, expect to be asked about the background to the CCJ and how it was resolved. You’ll also need to show that the business is now in a stable position with affordable projections for any new borrowing.

Business loan options with bad credit

If you’re applying with bad credit, you’re less likely to be offered a straightforward high street facility and more likely to see offers from specialist lenders. These may be structured slightly differently to a standard term loan.

Unsecured business loans

Some lenders will still offer an unsecured business loan where there is bad credit, particularly if issues are older, settled and the business is trading well. Credit checks will still be part of the process and pricing is usually higher than for a clean-credit customer, with stricter limits on how much you can borrow and for how long.

Secured and asset backed lending

If you own property or business assets, a lender may be more open to considering the application on a secured basis. This could be a loan secured on commercial or residential property, or funding taken against equipment or vehicles. Using security can improve the chances of approval, but it also means the asset is at risk if repayments are missed.

Cash flow based and alternative finance

In some cases, lenders will place more emphasis on income and trading than on your credit history alone. Examples include invoice finance facilities linked to your debtor book, or merchant cash advances repaid as a percentage of card takings. These can be options where recent credit issues make a traditional loan harder to obtain, but they still need clear evidence of ongoing sales and affordability.

Key risks with bad credit business loans

Bad credit business lending can be useful in the right circumstances, but it comes with additional risks worth understanding before you go ahead.

Higher costs

Interest rates and fees are usually higher where there is bad credit or CCJs, reflecting the extra risk the lender is taking on. That can make repayments more of a strain on cash flow if the business hits a quieter period.

Stronger lender controls

You may see shorter terms, tighter covenants or closer monitoring of your account. Missing payments or breaching conditions can lead to extra charges, restrictions or, in some cases, the facility being called in.

Security at risk

Where a loan is secured on property or other assets, those assets are at risk if the business cannot maintain repayments. Personal guarantees can also leave directors personally liable for some or all of the balance if the company cannot pay.

Further impact on credit

If a bad credit business loan later falls into arrears or default, it can worsen both business and personal credit files, making it harder and more expensive to borrow in future.

Because of this, it’s important to run the numbers carefully, be realistic about what the business can afford and only take on new borrowing where it supports a clear plan the business can sustain.

Is borrowing with bad credit the right move?

You can get a business loan when you have bad credit, but it only makes sense if the funding supports a clear plan and the repayments sit comfortably within your cash flow.

If the business is trading steadily, the money is going into something specific like stock, equipment or contracts, and the numbers still work after you factor in the higher cost, it may be worth exploring. If you’re mainly covering ongoing losses or juggling existing debt, pressing pause and looking at alternatives is often safer.

When your business needs funding, you’ll usually face two main choices: debt or equity financing. Both can give your company the capital to grow, but they work in very different ways.

Debt financing means borrowing money and paying it back with interest, while equity financing involves selling a share of your business to investors in exchange for capital. Each has its own trade-offs in terms of control, flexibility, and growth potential.

In this guide, we’ll break down debt vs equity financing, explaining how each option works, their pros and cons, and how to choose the right fit for your business goals.

What is debt financing?

Debt financing means borrowing money to fund your business and paying it back over time, usually with interest. It can come from banks, online lenders, or even friends and family – anywhere you take a loan with agreed repayments.

The biggest advantage of debt financing is control. You keep full ownership of your business and make decisions your way. As long as you meet the repayment terms, your lender has no say in how you run things.

It’s also predictable. You know how much you owe, when payments are due, and what it will cost you overall. But that structure comes with pressure. Missed payments or high interest rates can make cash flow tight, especially in slower months.

Debt financing works best when your income is steady and you want to grow without giving up equity. It’s often used for things like buying equipment, funding marketing, or expanding into new markets. These are short or medium term investments that can bring a clear return when managed well.

Read next: How do business loans work?

What is equity financing?

Equity financing means raising money by selling a share of your business to investors. Instead of repaying a loan, you offer part ownership in exchange for capital that helps your company grow.

The biggest benefit is freedom from repayments. With no fixed monthly costs, your cash flow has more room to breathe. You also gain investors who can bring experience, connections, and advice that go beyond funding.

The trade-off is control. When you sell equity, you share decision-making power and future profits. It’s a partnership, not a debt, and one that works best when you value expertise and long-term growth over full ownership.

Equity financing is common for start-ups and growing businesses that need flexibility or want to scale quickly. It suits moments when steady repayments aren’t realistic, and collaboration can move the business forward faster.

Differences between debt and equity financing

Both debt and equity financing can give your business the money it needs to grow, but they work in very different ways. The right choice depends on how you want to manage ownership, control, and risk.

Debt financing means borrowing money and paying it back with interest. You stay in charge of your business and keep all future profits, but you take on the pressure of regular repayments. It suits businesses with steady cash flow that can comfortably manage fixed costs.

Equity financing brings in investors who provide capital in exchange for ownership. You don’t have to make repayments, which frees up cash in the short term, but you share profits and decision-making. It works best for businesses that want flexibility, mentorship, or the backing to scale faster.

In simple terms, debt is about control and predictability. Equity is about partnership and growth. Most businesses use a mix of both at different stages, balancing ownership with opportunity.

Advantages and disadvantages of debt financing

Debt financing gives your business the funds to grow while keeping full ownership. It’s a reliable way to raise money, but it does come with responsibility. 

Advantages

• You stay in control. The lender has no share in your business, so decisions and profits remain yours.
• Clear repayment terms. You agree on payments upfront, which makes it easier to plan ahead and manage cash flow.
• Possible tax relief. In many cases, interest on business loans can be deducted, which helps reduce overall costs.
• Builds credibility. Making repayments on time strengthens your business credit and can open doors to future funding.

Disadvantages

• Regular repayments. Payments still need to be made even when income slows, which can add pressure.
• Interest costs. Borrowing always comes at a price, and interest adds up over time.
• Security requirements. Some loans need collateral, which could put assets at risk if repayments are missed.
• Limits flexibility. Carrying a lot of debt can limit future borrowing options or make investors more cautious.

When managed well, debt financing can be a useful way to grow your business on your own terms. It works best when you have steady income and a clear plan for repayment.

Advantages and disadvantages of equity financing

Equity financing allows you to raise money by selling a share of your business. It’s a good option when you want to grow but don’t want the pressure of regular repayments. Like any funding route, it has benefits and trade-offs to weigh up before deciding if it suits your plans.

Advantages

• No repayments. Because you’re not borrowing money, there are no monthly payments or interest costs. 
• Shared risk. Investors share the financial risk and the reward, so you’re not carrying it all alone.
• Support and experience. Many investors bring knowledge, networks, and insight that can help your business move forward.
• Better cash flow. With no loan repayments, your business can reinvest profits into development, marketing, or expansion.

Disadvantages

• Shared ownership. Investors become part-owners and may want a say in how key decisions are made.
• Profit sharing. Future profits are divided between you and your investors, which means a smaller personal return.
• Time and process. Securing investment takes longer than applying for a loan and often involves legal and financial checks.
• Expectations of growth. Investors usually look for a clear path to returns and may expect faster progress than a business funded through debt.

For many SMEs, equity financing is as much about partnership as funding. Choosing investors who share your goals can give you the stability and perspective to grow on stronger foundations.

Debt vs equity: which is right for you?

Choosing between debt and equity comes down to what matters most to you and how you want your business to grow.

If you like having full control and knowing exactly what you owe, debt financing can give you that stability. If you’re open to sharing ownership in exchange for insight, funding, and support, equity financing can help you move faster and think bigger.

Many SMEs find that using a mix of both works best. Debt can help you stay agile and independent, while equity brings fresh ideas and long-term backing. What matters most is choosing the option that feels right for your goals, your cash flow, and your way of doing business.

If you’re exploring other ways to fund growth, read our guide on bridging loans to see how they can make short-term opportunities easier to manage.

Buying land, starting a development or raising capital for a project doesn’t always go to plan. Funding can take time, and opportunities don’t always wait. That’s where a bridging loan can help. It’s short-term finance that releases funds quickly so you can keep your plans moving.

A bridging loan gives you access to money while you wait for funds from another source, such as a sale, refinance or new funding facility. It’s secured against property or land and often used by developers, investors and business owners who need flexibility to buy, build or reinvest without delay.

Because interest is usually rolled up and repaid at the end of the term, bridging loans can also help ease short-term pressure on cash flow while you focus on your next stage of growth.

If you’re exploring your options or want to understand how bridging loans work, this guide explains what they are, when they’re useful and the key things to consider before applying.

What Is a Bridging Loan?

A bridging loan is a short-term finance solution that helps businesses, developers and investors access funds quickly while waiting for other capital to come through. It’s often used to buy land, start a development or inject cash into a project without having to wait for a sale or refinance to complete.

Instead of putting plans on hold while funding catches up, a bridging loan lets you move ahead and repay once your exit is ready. The loan is usually secured against property or land and runs for a few months up to around two years, with interest often rolled up and repaid at the end of the term.

At its simplest, a bridging loan is exactly what it sounds like: a practical way to bridge the gap between needing finance now and receiving it later.

How Does a Bridging Loan Work?

A bridging loan gives you quick access to funds that are repaid once your exit is ready. That exit might be a property sale, a refinance or the release of other capital. Because the loan is secured against land or property, it can often be arranged much faster than traditional finance.

The lender will look at the value of the asset, how long you’ll need the funds for, and your exit plan. Once approved, the money can be released within days, which makes bridging a practical option when a deal or project can’t wait.

Most commercial bridging loans run between six and twenty-four months. Interest is rolled up and paid at the end of the term, so there are no monthly repayments to manage while the project is underway. That flexibility helps keep cash flow healthy while you focus on the work in front of you.

For example, a developer might use a bridging loan to buy land while waiting for planning approval, or an investor might use one to refurbish a property before refinancing. Once the project’s complete or the asset is sold, the loan is repaid in full.

When Should You Use a Bridging Loan?

A bridging loan can be useful any time there’s a gap between when you need funds and when longer-term finance becomes available. It’s often used by property developers, investors, and business owners who need to move quickly on an opportunity that can’t wait.

You might use a bridging loan to:

• Buy land or development sites. Bridging finance can help you secure a site fast while you wait for planning approval or a longer-term facility to complete.
• Fund a property refurbishment or conversion. Developers and investors often use bridging loans to cover renovation costs before refinancing onto a buy-to-let or commercial mortgage.
• Support business cash flow. Companies can release equity from owned property to invest in growth, manage short-term costs, or take advantage of new opportunities.
• Purchase property at auction. Auctions often require completion within weeks. Bridging gives you the funds to secure the property first and sort your main finance later.
• Cover project costs while waiting for a sale or refinance. If funds from another project or asset are still tied up, bridging finance can keep things moving in the meantime.

Since bridging loans are secured against property, you might find it useful to read more about the difference between secured and unsecured loans before deciding which option fits your situation best.

Are Bridging Loans a Good Idea?

A bridging loan can be a good idea if you need short-term finance and already have a clear plan for how you’ll repay it. They’re often used by developers, investors and business owners who want to move ahead with a project while waiting for longer-term funds to come through.

You might use one to buy land, fund a refurbishment or release equity from property to support cash flow. The key is to have a clear exit in place, such as a sale or refinance, that will repay the loan once the project is complete.

It’s also important to weigh up the costs. Bridging loans tend to have higher interest rates and fees than standard business finance, and because they’re secured against property or land, timing really matters. Make sure your exit strategy is realistic and that you’ve allowed enough time for everything to complete.

Used carefully, a bridging loan can unlock capital fast and help you keep your plans on track. It offers flexibility, speed, and breathing room when you need it most.

• Want to learn about another form of short-term finance? Read our guide on asset finance to see how it compares to bridging loans.

For many small businesses, cash flow doesn’t always run to plan. A quiet season, a late-paying customer, or an unexpected opportunity can all leave you needing quick access to funds. One option that’s become increasingly popular is the merchant cash advance.

Put simply, a merchant cash advance gives you an upfront sum of money, which you then repay through a share of your future card sales. Because repayments move in line with your turnover, it can feel more manageable than fixed monthly instalments, especially if your income tends to fluctuate.

In this guide, we’ll explain exactly what a merchant cash advance is, how it works, and even what happens if you default on a merchant cash advance. By the end, you’ll know whether this type of finance could be the right fit for your business.

What Is a Merchant Cash Advance?

A merchant cash advance (MCA) is a type of business finance that gives you a lump sum upfront, repaid gradually through your card sales. 

Unlike a traditional loan with fixed instalments, the repayment adjusts with your turnover. This means you pay back more when sales are strong and less when things are quieter.

It’s a simple model. The finance provider agrees an advance based on your recent card revenue, then collects a set percentage of your daily or weekly transactions until the balance is cleared.

Because repayments are tied to card takings, merchant cash advance loans are most commonly used in sectors like retail, hospitality, and e-commerce, where card payments make up the bulk of income. 

They’re also unsecured, so you don’t need to put property or other assets at risk, and approval tends to be faster than with a standard business loan.

How Does a Merchant Cash Advance Work?

The amount you can borrow through a merchant cash advance is usually linked to your recent card sales. A provider reviews your turnover over the past few months and agrees an advance that reflects those figures.

Once approved, the funds are transferred straight into your business account. From there, repayment happens automatically. Instead of fixed instalments, the provider takes an agreed percentage of your card sales as they come in.

This means repayments move with your income. 

• On busy weeks, more is repaid as sales are higher.
• On quiet weeks, less is repaid, giving your cash flow more breathing space.

For example, a café might repay more in December when footfall is high, and less in January when trade naturally slows.

There’s no rigid repayment schedule. The advance is gradually cleared through your sales until the balance, along with the agreed fees, has been repaid in full.

Advantages of a Merchant Cash Advance

For many SMEs, the main benefit of a merchant cash advance is flexibility. Repayments adjust in line with sales, which can take the pressure off during quieter months. But there are several other advantages worth noting:

1. Quick access to funds

The application process is usually quicker and lighter on paperwork than a traditional business loan. Once approved, funds can often reach your account within a few days. This is particularly useful if you need to cover wages, buy stock, or act on a new opportunity quickly.

2. Repayments that move with your turnover

Because repayments are taken as a set percentage of your card transactions, they rise and fall in line with your turnover. When business is busy, more is repaid; when things are quieter, less goes out. This helps manage seasonal or unpredictable income.

3. No security needed

Merchant cash advance loans are unsecured, so you don’t need to tie up property or other assets. If you’re interested in other unsecured funding routes, you can also explore our unsecured business loans page.

4. Designed for card-based businesses

In sectors such as hospitality, retail, and online sales, where most income comes through card transactions, repayments happen automatically through your existing system.

5. Clear and predictable

From the outset, you’ll know what percentage of sales is being collected. That makes it simple to understand how the advance will be paid back, without hidden surprises.

Disadvantages of a Merchant Cash Advance

While merchant cash advances can be a useful tool, they aren’t always the best fit for every business. Here are some of the drawbacks to think about before applying:

1. Higher overall cost

MCAs can be more expensive than traditional loans. The fees are agreed upfront, and the total doesn’t reduce even if you clear the balance faster than expected.

2. Reliance on card sales

Because repayments are taken directly from card transactions, this type of finance works best for businesses that rely heavily on card payments. If you take most payments in cash or through invoices, it may not be suitable.

3. Uncertain repayment timeline

There’s no fixed end date. How quickly the advance is repaid depends entirely on your sales – busy periods will shorten the term, while quieter months can extend it. That can make planning cash flow less predictable.

4. Smaller borrowing amounts

The size of the advance is tied to your turnover. If you’re a newer or lower-volume business, the amount you qualify for may be fairly modest.

5. Not regulated in the same way as loans

In the UK, merchant cash advances aren’t regulated by the Financial Conduct Authority. This doesn’t mean they’re unsafe, but it does mean you don’t have the same formal protections you’d find with a regulated business loan.

What Happens if You Default on a Merchant Cash Advance?

Defaulting on a merchant cash advance means you’re unable to keep up with the agreed repayments taken from your card sales. This usually happens if sales drop sharply or if the business stops trading.

If a default on a MCA occurs, providers may:

• Ask for the outstanding balance. You could be asked to repay what’s left in full.
  
• Apply fees or charges. Extra costs can be added if payments are missed.
  
• Report to credit agencies. This could make future borrowing more difficult.
  
• Take legal steps. In more serious cases, action may be taken to recover the debt.

Because merchant cash advances are unsecured, your property or assets aren’t automatically at risk. That said, defaulting can still put real strain on your finances and limit future funding options. 

If you’re ever concerned about repayments, it’s best to contact the provider as soon as possible to discuss potential solutions.

Is a Merchant Cash Advance Right for You?

A merchant cash advance can be a fast, flexible way to raise money if most of your sales come through cards and your income tends to fluctuate. Because repayments track your turnover, the pressure eases during quieter trading periods and increases naturally when sales are strong.

That said, it isn’t the right fit for every business. The higher overall cost, variable repayment length, and reliance on card sales are important factors to weigh up before deciding.

If you’d like to understand this option in more depth, you can find more detail on our merchant cash advance page.

Every business hits a moment where extra cash could make all the difference. Maybe you’ve spotted a chance to grow, or maybe you just need a little breathing room to cover day-to-day costs. In times like these, many owners start wondering how business loans work.

At their heart, business loans are quite simple. You borrow money to support your company and repay it over time. What’s less clear is the range of loan types available, how lenders decide, and which option makes sense for you.

This article will walk you through the essentials so you feel confident about what a business loan is, how it works, and the steps to take if you’re thinking about applying.

What is a Business Loan?

A business loan is money borrowed from a lender to support your company, with an agreement to pay it back over time, usually in monthly instalments and with interest.

Businesses use loans for different reasons. Some need short-term support to manage cash flow or cover everyday expenses. Others borrow to invest in growth, whether that’s upgrading equipment, hiring staff, or opening in a new location.

In practice, a business loan gives you access to funding when your own cash reserves aren’t enough. It’s a financial tool designed to help you keep the business running smoothly or move forward with plans that might otherwise stay on hold.

• For regulated guidance, you can also check the Financial Conduct Authority’s overview on loans.

How Do Business Loans Work?

Once you’re approved for a business loan, the lender provides a lump sum of money that goes straight into your business account. You then repay it over an agreed period, usually in monthly instalments that cover both the amount you borrowed and the interest.

To decide how much to lend, providers look at your company’s financial picture. They’ll consider things like turnover, credit history, and what the loan is needed for. The aim is to make sure the repayments are realistic and the funding helps your business move forward.

For some, a business loan is simply a safety net to get through a slow patch and keep staff paid. For others, it’s the push they need to invest in something bigger, like new equipment or a second location. The repayment model stays the same, but the impact it has on each business can look very different.

Different Types of Business Loans 

Business loans come in a few different forms, and the right choice depends on what you’re trying to achieve. Some give you quick access to cash, while others are designed for bigger, long-term plans.

Unsecured Business Loans

With an unsecured loan, you don’t need to put up assets like property or equipment as security. That makes them faster to arrange and a practical choice if you want funding to cover cash flow or take advantage of a short-term opportunity.

If cash flow support sounds like what you need, you can find out more on our unsecured business loans page.

Secured Business Loans

A secured loan is backed by assets such as property, vehicles, or equipment. Because this lowers the risk for the lender, you may be able to borrow larger amounts or access more competitive rates.

For larger borrowing or long-term investment, see how a secured loan could work for your business.

Short-Term vs Long-Term Loans

The length of a loan can make a big difference to how useful it is. Short-term loans, often repaid within a year, can help cover things like seasonal stock, unexpected bills, or payroll during a quiet patch. They’re about keeping the business steady when cash is tight.

Long-term loans run for several years and are usually tied to bigger projects. A company might use one to buy new machinery, expand into a larger space, or fund a big marketing campaign. Because the repayments are spread out, they’re easier to manage when you’re investing in growth that takes time to pay off.

Business Loan Requirements in the UK 

Applying for a business loan can feel daunting, but the process is more straightforward when you know what lenders are looking for.

First, it helps to be clear on why you need the loan and how much funding makes sense for your business. Lenders want to see that the money has a purpose and that you’ve thought through how it will be repaid.

You’ll usually need to provide recent financial information, such as accounts, bank statements, or cash flow forecasts. Your credit history also plays a role, as it shows how reliably you’ve managed borrowing in the past.

Many business owners find the process easier with guidance. Working with a broker can save time, highlight the right loan options, and improve your chances of getting approved. If you’d like tailored advice, you can get in touch with our team.

Key Considerations Before Applying

Every loan has its upsides and trade-offs. Here are a few things to keep in mind:

• Repayment certainty: Monthly repayments are fixed, so you’ll need to make sure your cash flow can comfortably cover them.
• Interest rates: These vary depending on your credit history and whether the loan is secured or unsecured.
• Documentation: Lenders will usually expect to see accounts, bank statements, or cash flow forecasts.
• Extra support: The UK government offers additional business finance guidance that can help you explore funding options beyond traditional loans.

For a clearer picture of what a loan could mean for your cash flow, use our business loan calculator to test repayment options before you apply.

Find the Right Loan for Your Business

When you’re ready to take the next step, you can apply for a business loan online or chat to our team about the best options for your business. We’ll help you find funding that feels right for where you are now – and where you want to grow.