Bad Credit Business Loans

Get approved for your business loan even with bad credit.

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, updated on July 3rd, 2024       

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It is common for businesses to want to capitalise on promising opportunities with their finances, but many could struggle to produce the required funds and carry an imperfect credit rating that may hinder standard loan applications.

Whether you’re aiming to start a new business or continue to expand your existing one, bad credit business loans can be a great way to access the funds which you need to make your business finances work for you.

Read about how to successfully find a lender that can offer you a bad credit business loan and how to maximise your chances of approval here.

Can I get a bad credit business loan with guaranteed approval in Australia?

No – there are no lenders who can offer guaranteed approval for bad credit business loans, as this represents too great of a risk for them to take on and also risks placing unreasonable financial burdens upon those in untenable positions. Despite this, though, bad credit lenders still provide an option for business owners in need of financing.

Bad credit business loans work the same way as regular business loans; however, they are designed specifically for businesses which have poor credit scores, have owners under Part 9 Debt Agreements or have assets frozen due to legal proceedings. These loans are generally offered by specialist, online lenders whose focus is on providing fast solutions for businesses or individuals who need extra funds to launch or continue to operate their business.

Because these loans are essentially the only option available to individuals or businesses with poor credit histories, you will find that the associated fees and interest rates will be higher than a regular business loan. You will also be more limited in terms of your borrowing range, although providing security can increase this significantly. Despite this, though, bad credit business loans provide a pathway for business owners to obtain the financing they need to help run their business.

How do I maximise my chances of approval for my bad credit business loan?

There are several methods you can employ to vastly improve your chances of having your application for a bad credit business loan improved. Some of these methods include:

Applying for a joint business loan

If you have an associate with a strong credit score, you could consider applying for a joint loan. This provides lenders increased confidence in your ability to repay your loan and could result in not only having a higher chance of your getting loan getting approved, but also a more competitive interest rate.

Only apply for what you can manage

By choosing a loan term and borrowing amount that is most suitable for your business’ projected cashflow, your lender will see how you are able to meet your repayment obligation and will be more likely to issue you credit. This might mean opting to repay your loan over a longer period of time where possible or borrowing a smaller amount for your business, which can make your monthly repayments are more manageable.

Provide security

If you are in a position to provide an asset as security, you will be able to improve your chances of having your application approved. Such assets can be either personally owned or owned by your business and can include your family home, other investment properties or commercial assets such as shopfronts or machinery.

Take steps towards improving your credit score

Ensuring that your credit score is as strong as possible before applying for your business loan will improve your chances of being approved. You can do this in the lead up to your application by ensuring that your personal and business bills and rent are paid promptly and that your credit limits are lowered.

Formulate a strong business plan

By providing your potential lender with a thorough business plan and financial forecasts for your business, you can clearly demonstrate that your business will be able to make its repayments and give confidence to your lender that you are fit to receive your loan.

What affects your approved borrowing range on a bad credit business loan

Need more information on bad credit business loans?

Can I get a bad credit business loan while bankrupt?

No – you will not be able to access finance for your business while bankrupt. However, once your bankruptcy has been discharged for 18 months, you will be able to access a range of finance options. It is a good idea to use your bankruptcy period to build a record of fiscal discipline in your business and improve your chances of your application being approved by making sure that all of your expenses and bills are paid on time.

Can I get a bad credit business loan under a Part 9 debt agreement?

Yes – even if you are under a Part 9 debt management agreement, you can still access business loans. Your options will be more limited, but some specialist online lenders can still assist you and your business.

Should I take out my bad credit business loan with a short borrowing term?

Your loan term should depend on your business’ particular financial situation and over what length of time you can realistically make your repayments. If your business can do so, it can be a good idea to take out a small loan over a shorter loan term in order to prove that you can reliably make your repayments. This can give you a better deal on subsequent loans and ultimately help your business.

Do I need to provide security for my bad credit business loan?

You do not need to provide security for a bad credit business loan, but you will find that by providing an asset for security or using a guarantor, you will be able to reduce the interest rate of your loan and ultimately save money.

What will I need to provide when I apply for a bad credit business loan?

When applying for a bad credit business loan, you will need to provide a range of documents which verify your personal information and your business’ finances. These include a government-issued photo ID, your Australian business or company number and records of yours and your business’ finances such as bank statements or cash flow statements. Some lenders will require you to provide a business plan outlining your expected income and outgoings.

Can I make repayments towards my bad credit business loan ahead of time?

Some lenders will offer loans that include the capacity for you to make extra payments ahead of schedule. However, when applying for your loan, you should check to see if this will incur any extra fees. Making your repayments ahead of time, in the instance of a bad credit loan, can be a useful option for reducing the interest costs of your loan, which are generally higher than with regular business loans.