Bad credit business loans are a form of finance for business borrowers with a bad credit score. In other words, business loans for people who have a record of not paying their debts on time. They can also be for business people who have no credit score (such as start-up entrepreneurs).

At DFS, we arrange bad credit business loans for our clients. We’re private lending specialists and we’re more concerned about your future than your past.

Why it’s hard to get a bad credit business loan with a bank

Traditional lenders (like banks, building societies and credit unions) will check your credit score when assessing your business loan application. They can do this via credit reporting agencies in Australia like Experian, Equifax and illion. Any missed or late credit repayments can stay on your credit report for up to seven years. They will negatively affect your credit score. A credit score is also called a credit rating.

 

If you have a bad credit score, it’s highly likely that a traditional lender will reject your business loan application. And a rejected credit application further damages your credit score!

 

What’s a bad credit score in Australia?

Credit reporting agencies in Australia have slightly different credit scoring systems. However, your score will usually range between 0 and 1200. The higher the score, the better.

 

Any score below 550 is usually considered to be a bad credit score. Some bank lenders will require you to have a much higher score than 550 to approve your business loan application. You can find out your current credit score for free via credit reporting agencies.

Private (non-bank) bad credit business loan options

If you have a bad (or even an average) credit score, a private business loan may be your only option. Private loans are a legal and fast-growing sector of the Australian lending market. They are ideal for borrowers who can’t meet the strict lending criteria of mainstream lenders, such as having a good credit score. They are provided by private (non-bank) lenders.

 

How to get a business loan with bad credit

If you’re looking to start-up a business or you need funds to grow, a private loan could be the answer. Private lenders tend to think outside the box and evaluate business opportunities on their merits, not on your credit history.

 

They also understand that:

  • Businesses often need quick and hassle-free finance to capitalise on opportunities.
  • Your bad credit score may be the result of your customers not paying you on time. This is a common problem for small to medium-sized businesses in Australia.
  • Your credit score may have been affected by uncontrollable events like the COVID-19 business restrictions.
  • Your cash flow may fluctuate due to the seasonal nature of your business.

How to get a bad credit business loan on the best terms and conditions

There is a simple way to get a bad credit business loan on the best possible terms and conditions. You need to lower the private lender’s risk. You can do this by providing property as collateral security for your loan.

 

How much can you borrow for a bad credit business loan?

The amount you can borrow for a bad credit business loan from a private lender depends on:

  • How much collateral security you can provide.
  • The potential of your business opportunity.
  • Your ability to make your loan repayments.

 

 

At DFS, we have access to a pool of over 200 private lenders. We’ll take the time to understand your business opportunity so we can match you with a suitable private lender. We’ll also help you to arrange your business loan with flexible repayments to suit the cash flow of your business.