Getting a business loan with bad credit is more challenging but not impossible. Several UK lenders specialise in business lending to companies and sole traders with poor credit histories — though rates will typically be higher to reflect the increased risk. This guide covers the best options for UK businesses with bad credit in 2026, including what "bad credit" means in a business context, which lenders to approach, and alternatives worth considering first. What Counts as Bad Credit for a Business Loan?For business loans, lenders assess both the business's credit profile and the personal credit profile of the director or owner. Bad credit in this context may include: missed payments on previous loans or credit cards, County Court Judgements (CCJs), defaults, bankruptcy or insolvency history, or a very limited credit history (common for new businesses). Best Business Loans for Bad Credit UK 2026
Always verify current eligibility criteria directly with each lender before applying. Rates and criteria change. Applying for multiple loans in a short period can further damage your credit score — use soft eligibility checkers where available. Alternatives to Business Loans for Bad CreditInvoice finance: Borrow against outstanding invoices — the security is your receivables, not your credit history. Good for businesses with reliable customers but slow payment terms. Merchant cash advance: Borrow against future card sales. Repayments are a percentage of daily card revenue — no fixed monthly payment. Higher cost but accessible for card-accepting businesses with poor credit. Asset finance: Finance equipment, vehicles, or machinery using the asset itself as security. Credit history is less critical when the asset provides security. Business grants: Non-repayable funding that does not depend on credit history. Highly competitive but worth exploring before taking on debt. Bottom Line For UK businesses with bad credit needing finance, revenue-based lenders (Capify, YouLend) and Open Banking lenders (Iwoca) are the most accessible routes — they focus on your cash flow and trading performance rather than your credit score. For sole traders and very new businesses, the Government Start Up Loans scheme at 6% fixed rate is worth applying for even with imperfect credit. Always explore invoice finance and merchant cash advances as alternatives to traditional loans. Frequently Asked QuestionsCan I get a business loan with bad credit UK? Yes — several UK lenders offer business loans to companies and sole traders with bad credit. Revenue-based lenders like Capify and YouLend focus on your trading performance rather than credit history. Open Banking lenders like Iwoca consider your cash flow beyond your credit score. Rates will typically be higher than for good-credit businesses. What business loans do not require a credit check? Revenue-based financing products like merchant cash advances and invoice finance typically have less stringent credit requirements, as the security comes from your revenue or receivables rather than your credit profile. Open Banking lenders like Iwoca use bank transaction data to supplement or replace traditional credit checks. Will a business loan affect my personal credit score? If you are a sole trader, business loan applications typically show on your personal credit file. For limited company directors, most alternative lenders require a personal guarantee, which may mean a personal credit check. Always check with the lender before applying whether a hard credit check will be performed. This article is for informational purposes only and does not constitute financial advice. Always verify rates and terms directly with providers before applying. This article is not regulated by the FCA. |
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