Best business loans for bad credit in the UK

• Cash flow challenge: Small business owners struggling to access finance due to poor or limited credit history, even when their businesses are performing well.

   

• Perfect for: UK sole traders, limited companies, or start-ups with adverse credit looking for fair, flexible finance options to support cash flow or growth.

Novuna helps businesses with poor credit access funding based on performance, not just credit history, either through our award-winning in-house lending service or by comparing the market to ensure you find the right deal for your situation.

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Access funding even with a poor credit history

A bad credit rating doesn’t have to stop your business from growing. Many UK lenders now consider wider business performance such as turnover, cash flow, and customer base rather than focusing solely on credit scores.

Bad credit business loans are designed to help businesses with a poor or limited credit history access the funding they need to operate, invest, or recover from financial challenges. These facilities can be secured or unsecured, and often include more flexible repayment terms than traditional bank loans.

With the right support, even businesses with CCJs or defaults can secure affordable, short-term funding to keep operations on track.

What are bad credit business loans?

A bad credit business loan is designed for companies with a weak or inconsistent credit history. Rather than judging purely on past borrowing, lenders assess business performance, revenue, and affordability to determine eligibility.

Key features include:

• Funding from £1,000 to £500,000+, depending on turnover and trading history.
• Soft credit checks to avoid damaging your credit profile.
• Fast decisions often within 24-48 hours.
• Flexible repayment options matched to cash flow.
• Available for sole traders, limited companies, and partnerships.

Bad credit loans may carry higher interest rates than traditional loans, but they can help businesses rebuild credit while maintaining stability.

Best loan options for businesses with bad credit

There’s no one-size-fits-all solution. The best loan depends on your business structure, turnover, and repayment ability.

You can also explore alternative solutions through:

• Working capital loans to manage operational costs.
• Merchant cash advances for turnover-based repayments.
• Invoice finance to improve liquidity from unpaid invoices.
• Asset finance to fund essential tools and equipment.

Compare top lenders for bad credit business loans

There’s no one-size-fits-all solution. The best loan depends on your business structure, turnover, and repayment ability.

How to improve your chances of approval

Even with bad credit, there are steps you can take to strengthen your loan application and qualify for better terms.

1. Keep financial records up to date

Provide accurate, transparent financial statements where lenders value clarity over perfection.

2. Demonstrate consistent income

Show steady turnover and cash flow stability through bank statements or accounting software.

3. Offer collateral or a personal guarantee

This reduces lender risk and can improve approval odds or rates.

4. Apply for a realistic amount

Borrowing within your means demonstrates responsibility and affordability.

5. Avoid multiple applications at once

Too many credit checks in a short period can lower your score further.

6. Highlight business improvements

Show how funding will stabilise or grow your business where lenders favour proactive borrowers.

How to improve your credit score 

While securing funding, it’s equally important to rebuild your business credit for future borrowing.

• Check your credit report regularly using Experian or Equifax.
• Pay suppliers and bills on time to build positive payment history.
• Keep business and personal accounts separate to avoid confusion.
• Register your business address and financials with Companies House.
• Use small credit facilities responsibly to demonstrate repayment reliability.

Improving your credit score can make it easier and cheaper to secure finance in the future.

Alternatives to bad credit business loans

• Merchant cash advances: Repay funding through a small percentage of daily card sales.
• Invoice finance: Release cash tied up in unpaid invoices within 48 hours.
• Working capital loans: Support day-to-day operations, payroll, or supplier payments.

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How Novuna Business Cash Flow can help

We’ve helped thousands of businesses and unlock growth opportunities. - speak to our experts today to help you make the right decision for your situation.