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Bad credit usually refers to a business’ or a person’s failure to consistently meet payment obligations, which can result in a history of debt and is reflected in a low credit score.
There are several situations that could be affecting your credit score: unpaid or late payment of bills, a county court judgment (CCJ), filing for bankruptcy or insolvency, or defaulting on a credit agreement.
A low credit score can make applying for a loan difficult. As you are deemed a risky borrower, your finance options will be limited, and you will likely have to pay higher interest rates. But even if you have applied for a traditional bank loan and been rejected because of your credit score, there are still other ways you can receive capital.
The first scenario people tend to imagine when thinking about business loans is usually quite typical: sitting in a bank, hoping to get a loan, worried about a hard credit check driving their credit score lower and concerned their current credit score might not be high enough for their loan. Luckily, this is not the only way to get financial assistance. Here are a few possible ways of securing bad credit business loans, where credit score is less relevant:
A merchant cash advance acts like a bad credit business loan, and is a fast and flexible way to raise capital funding, even if you have an adverse credit history.
Unlike secured business loans from banks, we don’t require any collateral or business plans, nor are there any hard credit checks necessary. As a merchant cash advance provider, we look at your business’ recent debit and credit card transactions and apply a soft credit check instead, meaning we don’t just rely on your credit history or score when deciding. Since we don’t apply a hard credit check when assessing your eligibility for a merchant cash advance, applying for one with 365 Business Finance won’t affect your credit score at all.
If your registered office is located in the UK, and your business processes payments through a card machine (PDQ) and/or online payment system, and has been trading for at least 6 - 12 months, you could be eligible for our unsecured business funding between £10,000 and £300,000, even if you have bad credit, or no credit history at all.
With no fixed monthly payments, interest rates or hidden costs, repayments are based on an agreed percentage of your credit and debit card payments. This way, you only pay us back when your customers pay you, while you can focus on running and growing your business. This is one of many reasons why our merchant cash advance is an ideal alternative to bad credit business loans for small business owners who find the process of applying for bank loans both arduous and difficult.
These are the benefits of our merchant cash advance at a glance:
Will it affect your credit score?:
No, we only apply a soft credit check when assessing your eligibility.
The amount of unsecured merchant cash advance you can receive is based on your average monthly credit and debit card sales. For example, if your monthly turnover averages £10,000, you could be eligible to receive £10,000. Repayments are automatic and deducted as a small percentage of your monthly credit and debit card payments, without interest rates or fixed terms.
Qualification for our business cash advances is simple, as your business must:
Contact our customer services team to see if you are eligible or have further funding questions.
Essentially, a business credit score serves the same purpose as a personal credit score: to determine someone’s credit rating. Especially regarding approval for loans, your business credit score plays a major role.
Factors used to calculate your business credit score usually include payment history, information on debt and debt usage, industry risk, the size of your company and further operational data. However, which ones are used depends on the type of business credit score. Among those, the Dun & Bradstreet PAYDEX and the Experian Intelliscore Plus are the most widely used.
Unlike the personal credit score, however, the evaluation is not based on a fixed scale of 300 to 850. Instead, depending on the credit rating agency, it is typically rated on a scale from 0 to 100. The higher the score, the better your credit ranking.
A bad credit score is defined by a low credit score number, which can make it hard to qualify for good business loans or – if you are approved for one – will lead to higher interest rates in most cases.
Due to the different number scales used for different business credit scores, defining what makes a business credit score bad is not as straightforward as it is for personal credit scores. Experts agree that for most scores, being in the top 20 or 30% of the scale counts as a good credit score.
But even if you score lower than that, there are still many options for you to secure bad business credit scores with a poor credit history – like our merchant cash advance!
If you don’t want to be dependent on bad credit business loans, there are a few ways you can try to improve your business’ bad credit score. We’ve listed some of them:
The answer to this question depends on what kind of bad credit business loan you are looking to obtain. But generally speaking, a good personal credit score definitely can't hurt. Especially if your business is still young and doesn’t have a solid financial history, lenders might rather check your personal credit score than that of your business.
Yes, it is possible to get ongoing funding through bad credit business loans. At 365 Business Finance, we offer ongoing merchant cash advances for small to medium sized UK businesses. Additionally, our merchant cash advances are fully flexible, so in case you need more funds than what we can provide for your business, you are always free to apply for additional funding elsewhere.
With our merchant cash advance, we offer a fast, straightforward alternative to bad credit business loans. We'll support you with funds between £10,000 and £300,000, without setting weekly or monthly repayments. Instead, you pass a fixed, small percentage of your credit and debit card sales to us. This means your repayments are only due when you make sales, and they adjust to your cash flow automatically.
You don't have to worry about interest, APR or late fees: we simply add the costs to the advance as one, all-inclusive sum that is agreed-upon upfront.
Get your business funds easily and quickly by applying online in just a few minutes – no collateral or elaborate business plans needed.
No, you do not have to provide any kind of security to receive a merchant cash advance with 365 Business Finance. Our whole application process is designed in a way that requires minimal paperwork, so we can help you get your funding as quickly and easily as possible.
Unlike regular bank loans, a merchant cash advance with 365 Business Finance does not require any fixed weekly or monthly repayments. The advance can be easily paid back with a small percentage of your credit and debit card sales instead. This way you can simply pay off your advance whenever you generate revenue through your customers.
In practice this means that when your business has slow months where sales are down, so is the amount of repayment, which makes it easy to manage your cashflow. You don’t have to worry about APR’s or late fees either, since we only require one single, all-inclusive payment, which is added to the advance.
Another advantage is the simplicity of the application process: we approve your merchant cash advance application within 24 hours. This way, funds are deposited into your bank account within a few days.
Find a detailed comparison between our unsecured merchant cash advance and conventional bank loans here.
The cash advances we offer range from £10,000 to a maximum of £300,000.
The maximum amount advanced is equal to your average monthly credit and debit card sales. In case you require a bigger merchant cash advance, please reach out to our office. This way our experts can offer you a non-obligatory, bespoke quote to match your needs.
How long it takes for you to fully repay the merchant cash advance depends on your credit and debit card sales.
Yes, we cooperate with financial and credit brokers, as well as introducers. This allows us to help their clients obtain unsecured financing.
If you are interested in becoming an introducer for 365 Business Finance, speak to our partnerships team today - we offer bespoke funding solutions, from white label and co-branded packages to full-service marketing support and integration with API capabilities. Feel free to contact us at partnerships@365businessfinance.co.uk or 0207 1000 365 to find out more about our introducer and broker referral scheme.
