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.