Bad credit business loans in the UK, and what they really cost

A UK business with bad credit can usually still borrow, but rarely from its own bank and rarely cheaply. The routes that work are funding priced on your card takings, a CDFI loan, security that carries the risk, or a 7.5% Start Up Loan if the business is under five years old.

Published 29 October 2025Last updated 1 November 2026

Figures checked 1 November 2026.

What counts as bad credit to a business lender

Lenders look at two files: the company's and, for most small firms, the directors' or owner's personal file. The marks that move a decision are County Court Judgments, defaults, IVAs or a past bankruptcy, and a run of late payments. A CCJ stays on the register for 6 years unless you pay the full amount within a month, so a new one paid promptly does far less damage than one left to sit.

A thin file is a different problem from a bad one. A company with no borrowing history gets asked for bank statements and a guarantee; a company with a recent default gets declined by mainstream lenders and priced up by everyone else.

Your options, ranked by how much your credit file matters

Option	How much credit matters	Size and price (published)	Watch out for
Card-sales advance (MCA)	Least. Square, for one, bases offers on your Square sales data, not your credit history.	Sized to your card takings; one fixed fee. Most providers do not publish a rate card.	Not regulated by the FCA. The fee is fixed, so repaying fast does not save money.
CDFI loan	Some. CCJs and IVAs are red flags but not always deal-breakers.	Typically £25,000 to £250,000, some from £1,000. Decisions often within a few days.	Regional coverage; they want to understand the business, so expect a conversation.
Secured or asset finance	Less, because the asset carries the risk.	Panel secured rates 6% to 22% a year.	The asset is at risk if you cannot repay. Slower: valuation and legal work.
Start Up Loan	Matters: a personal credit check, valid for 90 days.	£500 to £25,000 at a fixed 7.5% a year, 1 to 5 years.	Personal loan: you are liable, and default can bring a CCJ.
Unsecured loan, online lender	A lot. Price is set by your file.	Panel range 7% to 44% a year.	A personal guarantee is normal.
Growth Guarantee Scheme loan	A lot. Lenders run standard credit checks.	Up to £2m; lender sets the rate.	You stay 100% liable; the guarantee protects the lender.

If your bank has already said no

Ask for the reason in writing, then use the Bank Referral Scheme. Since November 2016, 9 designated banks (Bank of Ireland, Barclays, Danske Bank, First Trust Bank, HSBC, Lloyds Bank, RBS, Santander, Virgin Money) must offer a declined small business a referral to an online finance platform. It costs nothing and puts your application in front of lenders who take risks the bank will not.

What bad credit costs, worked through

Take the house example: a shop taking £5,000 a month on cards that needs £10,000 over 24 months. Across our partner's panel of more than 200 UK lenders, unsecured loan rates run from 7% to 44% a year (checked 1 September 2026). Trading record and credit history decide where in that range a business lands.

£10,000 over 24 months	Monthly repayment	Total interest
7% (clean file, established)	£447.73	£745.42
15% (middle of the panel)	£484.87	£1,636.80
44% (top of the panel)	£633.68	£5,208.26

The arithmetic: at 44%, the monthly rate is 44 ÷ 12 = 3.67%, and spreading £10,000 over 24 equal payments gives £633.68 a month. Over two years that is £4,462.85 more interest than the same loan at 7%.

A card-sales advance prices differently. Suppose an illustrative quote of £5,000 to be repaid as £6,000 (these are example numbers, not a quote) at 15% of card takings. On £5,000 a month that is £5,000 × 15% = £750 a month, so £6,000 ÷ £750 = 8 months to clear a £1,000 fee. A quiet month stretches the term but does not add to the cost. Run your own numbers in the card-sales funding calculator.

Guaranteed approval does not exist

Every lender runs credit and fraud checks; the Growth Guarantee Scheme rules even require it. Two signs a firm is not a real lender: it guarantees approval before seeing your accounts, or it wants a fee before you have an offer. Check the firm on the FCA register before you hand over bank statements.

Five things that improve your odds

Pay any new CCJ inside a month. That is the only way to keep it off the register entirely.
Use soft searches first. Funding Circle checks eligibility without affecting your credit score; a broker quote should too. Save the hard search for the lender you mean to use.
Ask for an amount your bank statements support. Lenders size from your turnover. Asking for twice what your account shows invites a decline.
Offer security if you have it. Equipment or property moves you into the secured band, 6% to 22% on the panel, but the asset is then at risk.
Explain the mark. CDFIs say transparency is what gets a CCJ past an underwriter; a one-line explanation and a settlement letter beat silence.

When not to borrow

If the only offer you can get sits near 44% and the money is for something without a quick payback, such as a refit or plugging a loss, stay put. Six months of on-time payments and a settled CCJ can move you down the range, and the 24-month arithmetic above shows what that is worth. If card fees are part of what is squeezing cash flow, a free statement review is a cheaper first step than any loan.

Bad credit? See what our partner's panel can offer

One enquiry reaches our partner's panel of more than 200 UK lenders. A specialist calls you back, Mon to Fri, 9am to 5:30pm.

Funding enquiries are handled by our specialist commercial finance partner. We may receive a commission; it never changes the rate you are offered. Finance is subject to status.

Questions people ask

Am I eligible for a business loan with poor credit?

Often yes, but usually not from a high street bank. Card-sales advances look at your takings rather than your credit history, CDFIs treat CCJs and IVAs as red flags rather than automatic declines, and secured or asset finance lets the security carry some of the risk. Expect a higher rate: across our partner's panel, unsecured loan rates run from 7% to 44% a year, and a weak credit file sits towards the top.

Are there bad credit business loans with guaranteed approval in the UK?

No. Lenders run credit and fraud checks before they lend; even the government-backed Growth Guarantee Scheme requires lenders to do their standard checks on every applicant. A firm that promises guaranteed approval or asks for a fee before you have an offer is a reason to walk away, and you can check any lender or broker on the FCA register.

Can I get a business loan with a CCJ?

Yes, from some lenders. A CCJ stays on the register for 6 years unless you pay the full amount within a month of the judgment, so paying a new one quickly matters more than anything else you can do. CDFIs and card-sales funders will often still consider you; mainstream unsecured lenders mostly will not while it is unsatisfied.

Can a start-up with bad credit get a loan?

A Start Up Loan (£500 to £25,000 at a fixed 7.5% a year) is open to businesses trading for less than 5 years (60 months), but it is a personal loan and runs a personal credit check, valid for 90 days. A thin credit file is less of a problem than recent defaults. If you are turned down, a CDFI is the usual next step.

Is a merchant cash advance a loan?

Providers structure it as a purchase rather than a loan: Square, for example, buys your future card sales at a discount and takes a percentage of every card sale until the balance is met. That is why eligibility rests on your sales rather than your credit file, and also why it is not regulated by the FCA: you get none of the consumer credit protections a regulated loan carries.

Does checking my eligibility hurt my credit score?

A soft search does not. Several lenders, including Funding Circle, check eligibility without affecting your credit score, and getting a quote through our partner involves no credit check. A full application usually triggers a hard search, so compare before you apply rather than applying to five lenders in a week.

Sources

Every figure on this page comes from the lender's or scheme's own published page, read on 1 November 2026. Panel rate ranges come from our partner's lender-panel catalogue, checked 1 September 2026. We do not use comparison sites as sources.