Business loans for sole traders with bad credit

• Cash flow challenge: Sole traders with limited or poor credit history often find it difficult to secure funding through traditional banks, leaving working capital gaps that can slow business growth.

• Perfect for: Self-employed professionals, tradespeople, and freelancers seeking flexible business finance despite previous credit challenges.

Novuna helps sole traders secure funding that’s built around business performance, not just credit history, either through our award-winning in-house lending service or by comparing providers to find you a great deal.

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Support for sole traders with poor credit

Running your own business means your personal and business finances are often closely linked and that can make funding more difficult if your credit score has taken a hit.

At Novuna, our finance options are designed to help sole traders with strong business potential but weaker credit histories. We focus on your trading performance, turnover, and ability to manage repayments, not just your credit record.

With flexible funding options, you can:

• Access the cash you need for stock, marketing, or expansion.

• Rebuild your financial stability through consistent repayments.

• Unlock working capital without relying on traditional bank lending.

Best business finance options for sole traders with bad credit

Finding finance as a sole trader with bad credit doesn’t have to be complicated. There are several practical funding routes that can keep your business moving:

• Start Up Loans: Government-backed funding up to £25,000, ideal for new or early-stage sole traders.

• Merchant cash advances: Flexible repayment based on a percentage of your card sales, ideal for retail and service-based businesses.

• Secured business loans: Use assets or property as collateral to access lower interest rates.

• Working capital loans: Support short-term cash flow, even with limited credit history.

• Invoice finance: Unlock up to 90% of the value of unpaid invoices within 48 hours.

How to improve your chances of getting approved

Even with bad credit, there are steps you can take to improve your eligibility and secure better finance terms:

• Show consistent business performance: Demonstrate steady income and reliable client payments.
• Separate business and personal accounts: This helps lenders assess your business independently.
• Prepare clear financial records: Up-to-date statements, tax returns, and cash flow reports strengthen your application.
• Avoid multiple loan applications: Applying for too many loans at once can negatively affect your score.
• Offer collateral or a personal guarantee: This can help secure better rates from lenders.

Taking small, proactive steps to strengthen your financial profile can make a big difference when applying for funding.

Boost your cash flow Speak to an expert

How to improve your credit score

Improving your credit score isn’t an overnight process but consistent action can lead to better funding opportunities and lower interest rates.

Here’s how sole traders can start rebuilding their credit standing:

1. Check your credit report regularly.
   
   Review your report from providers like Experian, Equifax, or TransUnion to identify errors or outdated information.
   
   
2. Pay bills and suppliers on time.
   
   Late payments can negatively affect your score. Setting up automated payments can help maintain consistency.
   
   
3. Reduce existing debt.
   
   Clearing small balances on credit cards or overdrafts can boost your score over time.
   
   
4. Keep credit utilisation low.
   
   Try not to use more than 30% of your available credit limit — this shows lenders you manage credit responsibly.
   
   
5. Register your business address.
   
   Being on the electoral roll (if applicable) or maintaining consistent address details improves your financial traceability.
   
   

By managing your finances proactively, you can increase your credit score and qualify for better funding terms in the future, improving both business and personal financial health.

Benefits of business loans for sole traders with bad credit

• Access to essential funding: Unlock cash even when traditional lenders say no.
• Flexible repayment structures: Match payments to your revenue cycle.
• Credit rebuilding opportunity: Repaying on time helps restore your credit profile.
• Improved cash flow: Support for stock, marketing, or equipment without pressure on savings.
• Business growth potential: Invest in the tools and resources your business needs to grow.

Bad credit doesn’t have to hold your business back. With the right finance partner, you can rebuild, grow, and regain financial control.

How Novuna Business Cash Flow can help

We’ve can help thousands of UK sole traders access funding based on real trading performance, not just credit scores.

Get in touch with our experts today and we will find a great fit for your situation.