Most traditional finance institutions are not prepared to consider funding a small business if the business or the business owner has a bad credit record. Fortunately, there are still some options open to you and it may be possible to raise the financing you need.
Why lenders use credit scores
Lenders use credit scores (for both the business and the owners) to work out how risky it is to lend money to you. Their thinking is that bad credit scores mean there is a high risk of the loan not being paid back and that isn’t good for their business.
There are two options for you to take:
- Restore your credit rating. It is possible to do this, but it will take time and commitment on your part.
- Explore alternative funding options. The reasons why you have a poor credit record will determine whether you are eligible for these.