Finance 29 August 2019

How to buy property as a business owner with bad credit

Getting a business loan from a mainstream lender when you have poor credit can be difficult. As far as most major high street lenders go, bad credit mortgages are pretty much out of the equation.

As are most other types of secured loans for business purposes if the applicant in question has a poor credit history.

Problems with imperfect credit are just as common among UK businesses and business owners as they are among everyday households. Particularly when it comes to larger financial products like mortgages, qualifying with a poor credit history can be tricky. Nevertheless, there are alternative options to the usual mainstream channels available, which can be ideal for business owners with bad credit.

Understanding your financial position

Be honest for a moment – do you actually know your credit rating? Are you 100% sure as to where you stand regarding your credit history and financial position?

If the answer is no, you’re certainly not in the minority. In fact, a recent study carried out by YouGov found that no more than around 25% of people in the UK know their current credit score. Perhaps even more surprisingly, a study carried out by ComRes found that more than half (59%) of all small businesses in the UK have never checked their credit reports. In addition, a whopping 87% demonstrated a lack of knowledge as to the factors that can have an impact on a business’s credit score.

When you consider just how problematic bad credit can be, this makes for somewhat alarming reading.

Nevertheless, it also clearly demonstrates just how many businesses aren’t on top of their credit scores. If you’ve run into difficulties accessing finance for business purposes, you’re far from alone. But what does this mean in terms of bad credit borrowing options? If the usual lending channels are a no-go, how can you make major investments (like property) for business purposes when you have bad credit?

Beyond the high street

The key to flexible and affordable borrowing with bad credit lies in setting your sights beyond the High Street. If major lenders have no interest in working with you, there’s no point wasting time on a scattergun approach by submitting numerous applications that are likely to be rejected. 

Don’t forget that every rejected application could inflict further damage on your credit score.

Instead, it’s worth contacting an experience broker such as UK Property Finance who will analyse your situation and submit applications based on likely success, not to mention, the equity you have tied up in your business. Assuming your business, even if only recently started trading, is buying or already owns acceptable assets, you could have everything you need to qualify for a wide variety of secured loans as bad credit mortgages for business are not so reliant on a business’s income and can be organised for business borrowers based on sufficient collateral.

If security really isn’t an issue, you may find your credit score inconsequential.

Where to find bad credit business loans

Again, it’s important to remember that most bad credit business loans (particularly for major investments like property purchases) are not available on the UK High Street. There’s an extensive network of specialist lenders who may be able to help you, but it’s not necessarily advisable to set your sights on any one lender specifically.

In terms of available options, there’s a multitude to choose from. Commercial mortgages, general secured loans for business purposes, short-term bridging finance, auction finance, development finance and many more besides. All of which can be issued primarily (or exclusively) on the basis of collateral, rather than credit scores.

Establishing your eligibility and determining which business loan best suits your needs begins with independent broker support such as from UK Property Finance. Organise a whole-of-market comparison by an established broker and tap into the most flexible and accessible deals the UK has to offer. All without affecting your credit score, in the event your application is declined. 

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