Commercial Lending When You Have Bad Credit

If you have bad credit and tried to get a business loan, it’s likely you’ve experienced the reality of commercial lending with bad credit – and not getting approved.  While having a poor business credit score can make business lending more challenging there are options available to help you obtain finance for your business and improve cash flow. In this article, we will share the lending solutions that are available to business owners with bad credit in Australia.

Get a loan for your business even if you have bad credit

Unsecured Business Loans

Unsecured business loans are an excellent option for those who require quick access to business finance when lending with bad credit. These loans do not require property security, making them an option for business owners who don’t own property or don’t wish to put it on the line. There are lenders for all types of credit history and industry types, although some unsecured lenders have very high interest rates.  It’s important business owners ensure they can afford the rates and fees associated with unsecured business loans before going ahead.

Equipment Finance

Equipment finance is another option for business owners with bad credit who require access to capital, are wanting to consolidate debt or purchase assets for their business. By leveraging existing assets, you can obtain financing even if your credit score is lower than you’d like it to be. 

Cashing out equity in business assets like vehicles and machinery is a solution we often use to help business owners consolidate expensive unsecured loans with daily direct debits.  By leveraging your assets you’re able to get much lower rates and longer loan terms.  This lowers repayments and can improve cash flow. 

Private Lending

Private lending is a solution you can access if you’re searching for “loans for bad credit Australia.”  Private loan providers’ commercial lending process does not credit score loan applicants.  Private lenders application process seeks to understand your equity position to secure the loan and understand your exit strategy at the end of the term.  This means they are a bad credit loan solution even if you have defaults and dishonours in your credit history.

Because most private lenders don’t credit score, we have even helped ex-bankrupts purchase commercial property and obtain business loans after being declined by banks. 

Alternative Lending Options

Alternative lending options, such as invoice finance – also known as debtor finance and factoring – is available to those with bad credit. Invoice finance is a line of credit secured by your invoices. Because it’s a secured loan lenders are prepared to look past an applicant’s bad credit scores to provide commercial loans.

If you’re seeking an invoice finance line of credit for your business and you have a bad business credit score, we’ve found lender selection is the most important part of the commercial loan process.  You want to choose a lender who welcomes your loan size, is comfortable with your industry and understands your sales cycle.

Understand The Commercial Lending Process To Get Approved

To improve your chances of getting approved for a commercial loan when you have a bad business credit score it pays to understand the application process for the type of loan you’re considering.  

In the commercial lending process there are several factors that lenders will consider. These factors include the director’s credit score, the business’ credit score, your cash flow, and your ability to service a loan.  However, not every loan application process is like this – as an example a private loan application process will take into consideration the value of the security being offered and your exit strategy but not the credit score of the loan applicant.  

To obtain the best possible loan terms for your situation business owners with bad credit may want to consider seeking the advice of a specialist loan expert.  This way you can be guided to the best possible outcome.

Improving Your Credit History For More Loan Options In The Future

While it is possible to obtain financing with bad credit, we recommend you work towards improving your credit history over time. This involves paying bills and loan repayments as they’re due and resolving any outstanding issues with creditors. Unpaid defaults will remain on your credit file until they’re paid – even if you believe the default was placed on your credit file in error.  By taking steps to improve your credit history, you can improve your chances of having better options in the future which will mean lower rates and more available credit.

Work with an expert on your bad credit business loan application

Having bad credit does not mean that you cannot obtain financing for your business. There are several lending solutions available for business owners with bad credit, including unsecured loans, equipment finance, invoice finance and private lending. 

By understanding the commercial lending process and seeking advice from professionals, business owners can find the commercial loan solution that best fits their needs. Remember to focus on improving your credit history to ensure that you have more options and better terms available to you in the future to ultimately improve business cash flow.

To get help from a bad credit loan expert you can contact us here.