What Counts as Bad Credit?
Adverse credit covers a range of situations: county court judgments (CCJs), satisfied or unsatisfied; individual voluntary arrangements (IVAs); defaults on credit agreements; missed or late payment records; historic bankruptcy (discharged 6+ years ago may not be a barrier); a business that has entered administration or liquidation in the past; and low personal or business credit scores resulting from limited credit history.
Finance Available with Bad Credit
Secured Business Loans
Property security is the single most effective way to access finance with adverse credit. When a lender has first or second charge against a property, the underwriting focus shifts from credit history to the asset value and the business's ability to service the loan. Secured loans of £50,000 to £5m+ are available for businesses with adverse credit where sufficient property equity exists.
Asset Finance
Asset finance lenders secure their position against the financed asset rather than relying on credit history. A business with CCJs can often access hire purchase or finance lease for vehicles, plant, or equipment because the lender knows it can recover the asset if payments are not maintained.
Invoice Finance
Invoice finance lenders focus on the quality of the customer base rather than the business's credit profile. If your customers are creditworthy large companies or public sector bodies, adverse credit on the part of the business or director is often manageable.
Merchant Cash Advance
MCAs focus on card terminal trading volume rather than credit scores. A business with consistent card revenue can often access an MCA despite adverse personal credit, particularly for smaller amounts up to £100,000.
Guarantor and Co-Applicant Finance
If a director or business partner with a stronger credit profile can act as guarantor or co-applicant, this can unlock facilities that would otherwise be declined.
What to Expect with Adverse Credit
Bad credit typically means: higher interest rates (2-10% above the rate available to a clean-credit borrower); lower maximum loan amounts; potentially shorter terms; additional security requirements; and more intensive underwriting. It does not necessarily mean a decline, but it does mean that broker advice is more important, not less, to find the lenders most likely to approve and negotiate the best available terms.