Are there any lenders taking bad credit businesses with guaranteed approval in Australia?
In Australia, many small businesses deal with bad credit. You should never default on a business loan, if you do it is easy to get drawn into a spiral of business debt that weighs heavy on your business, and leaves" guaranteed" (bank type) business loans out of reach.
Hence, there is no such thing as bad credit business loans with guaranteed approval, at least not in Australia, but encouragingly there are other options readily available for bad credit businesses seeking a business loan (including sole traders). There are a few online lenders who even as much as specialise in the bad credit sector in Australia, offering options for both an unsecured business loan as well as a secured business loan(including means such as invoice factoring which is relevant even for bad credit businesses as its the invoices of customers which act as security in the lending process).
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Bad Credit Business Loans in Australia
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Bad credit business loans are not necessarily related to any particular industry or region in Australia. An analysis in our business loan industry research shows that many of the businesses who use the Become financing platform (a loan matching platform for quick lending) come from a variety of industries, are businesses of all sizes, and have unique financing requirements.
Bad credit business lending blossoms in Australia
There is a very large selection of online lenders in Australia which are still applicable for small businesses with a less-than-perfect business credit score. None of them offer a “guaranteed approval” loan, simply because that’s not how it works in real life, but relatively, they are more receptive to bad credit scores, especially in comparison with banks.
Commercial credit is any credit you’ve applied for that isn’t for personal, household or family purposes. This includes business loans and goods or services that you’ve purchased while running a business and the payment has been deferred. Privacy laws around commercial credit information differ slightly to consumer credit information, so it’s worth being familiar with this too. If your business fails to keep up with its debt obligations, it can impact your business credit score.
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Are there any lenders who would take on any business, regardless of its credit score with a “GUARANTEED APPROVAL”? The short answer is no.
There are no bad credit score business loans with guaranteed approval. There isn’t a pool of lenders who are in the business of financing to simply accept anyone off the street, and provide companies with financing regardless of whether they believe the debt will be repaid in the future.
The longer answer is that there are plenty of lenders who are happy to take on bad credit businesses, but they won’t take just “any business”. They will inspect other aspects of the business and rely heavily on the average income, while minimising their risk and make only small loans of approximately one month of revenue.
We have created a nifty calculator for you to check how likely you are to get the loan you require:
Congratulations! Your business is healthy enough to borrow the amount you requested!
Become is a lenders marketplace which gets simultaneous quotes and offers from 18 leading Australian lenders. The platform's unique algorithm matches between lenders and businesses based on multiple factors. Lenders they work with include Prospa, OnDeck, Get Capital, Capify, Lumi, and Speedy Financing.
There isn’t a catch, per se, but there is a downside in comparison to bank loans or loans that would have been provided to your business if you had an immaculate credit score. It will be more expensive, and if lending to your business is deemed high risk, it could be really costly. This form of finance is a quick injection of cash destined to bridge over an unexpected cash gap, and it should be repaid as quickly as possible. Choosing the right lender, or using platforms that submit your quote to multiple lenders, can be another way of improving your chances of being approved as well as receiving multiple quotes to choose from.
Understanding Business Credit Scores and their Impact on Landing a Business Loan
See our complete guide to business credit scores in order to understand what makes for a ‘good credit score’ or ‘bad credit score’, how credit scores are calculated and the ways in which you can improve your business credit score.
Can I get a Business Loan With Credit Score 600?
Absolutely – businesses with a credit score above 600 will either be deemed to have a ‘good credit score’ or close to a ‘good credit score’ if you’re only just over 600. If you’re seeking a business loan with credit score of 600+ you can peruse any of our small business loan lenders and do not need to be specifically looking for bad credit business loans.
Can I get a Business Loan With Credit Score 500?
Yes – a credit score above 500 is still regarded as relatively good and there are a number of alternative lenders who provide loans to businesses in this range. Many factors will still influence whether you will be accepted, such as the current revenue of your business, how much and how long you’re looking to borrow and whether you have collateral to secure a loan.
Can I get a Business Loan With Credit Score 400?
Maybe – a score over 400 does not reflect a bad credit business. It actually indicates an ‘average credit score’ and even leading online lender OnDeck confirms it can lend to businesses with a minimum credit score of 400. Other lending requirements will have to stack up however and security is more likely to be required.
Bad Credit Business Loans Under 400
With a business credit score under 400, you will have to consider the bad credit business lenders listed on this page. Cigno Business Loans is the only lender to specifically advertise the fact they do not check a borrower’s credit score, preferring to rely on other business factors instead. However, as things stand, whilst Cigno remains an active business on the ABR, their website is currently down and they halted lending during the pandemic. A merchant cash advance can remain a solid option for bad credit businesses but some form of secured lending will be highly likely.
Wait, so should I seek a bad credit business loan that will accept me?
That question is really specific to your business. We cannot legally provide any financial advice, and even the online lending providers who are more receptive to bad credit business’ would not be able to give you a definite “yes” or “no” without understanding the specific loan requirements of your business.
Here are some guidelines to follow in order to make a decision whether you should be looking for a bad credit business loan at all.
Do you have any alternatives? Probably not, else you would not have typed “small business loans guaranteed approval” on Google.
Are you able to repay? If you are not sure whether you can repay your loan, you should not do it.
Are you able to repay in a reasonable period of time? As bad credit business loans levy incredibly high fees, dragging on a bad credit high interest business loan for prolonged periods will be very costly and could very well be the demise of your business.
Do you have a specific need for the advance you’re considering? Are you actually going to improve any aspect of your business by taking this loan?
There are certain types of loan that will improve your chances of being accepted as a bad credit borrower.
Business Loans for Bad Credit Borrowers
One of the best ways of improving your chances of landing a business loan is by providing collateral to secure the loan. A residential mortgage is commonly used, but there are other options for non-home owners too.
Secured Bad Credit Loans
The most common securities used as collateral for a secured business loan are typically residential or commercial mortgages. Ultimately, however, there are any number of assets which can be used to secure a bad credit business loan should they be of sufficient value to the loan amount. With the lender holding a charge over the asset in the case of the borrower defaulting on a loan, they have a higher probability of being able to recoup their money.
Your business could also use either the equipment it needs to buy for the business, or the equipment it already owns in the business, to access an equipment business loan. The asset or piece of equipment secures the loan, thus increasing the probability of receiving finance as a bad credit business.
Another option is using an invoice financing company which issues short term loans against the value of the invoices which are due to your business. The invoices act as a form of security and as it’s money due from your debtors, lenders are more interested in the credit profile of your customers than they are your business. In this instance, you’re only advancing money which is already due to your business anyway and it won’t help in gaining extra funds that might be needed for the investment to grow your business.
Just remember, this only works for B2B companies and to still proceed with care. The same rules apply when you are looking for a bad credit business loan and always be sure that all fees and associated costs are detailed to you at the onset of the loan. As a bad credit borrower you just have to be especially aware of this and the implications of the loan repayments in your cash flow forecasting.
Merchant Cash Advance
A merchant cash advance is another useful financing tool for bad credit businesses. Merchant cash advance companies do just as the name suggests – they provide cash advances to businesses that use a merchant to process payments (i.e. the business accepts card payments either online or in-person). The lender will then work directly with your merchant to deduct a % of your future merchant revenue in order to repay the cash advance. That’s another benefit for bad credit borrowers that may be low on cash, the repayments match your revenue – increasing when merchant sales are up and decreasing when merchant sales are down. Lenders are mostly focused on the amount of money you process through a merchant as opposed to the credit profile of your business.
I discovered a lender that is willing to provide a bad credit cash advance to any business.
There are predatory lenders out there on the market who are willing to take everyone and anyone. In fact these lenders won’t even care if you are a business owner or an individual, as their main business is consumer credit, or in other words bad credit loans for individuals, the riskiest and shadiest domain within financing.
These predatory lenders generally won’t care about security or the state of your business; in fact, they would be happy if you fail to pay your business cash advance, or personal cash advance, on time. With an annualised interest rate of 3-figures or more, the more your repayment is delayed, the more they earn. They have very good collection agencies that will make sure whatever money you are able to produce will go back to them, and if your business is struggling you may end up paying them for years and years to come, without ever managing to repay the original loan amount.
Please remember while seeking for a business loan and particularly for a bad credit business that business loans are not regulated in the same fashion as personal loans do in Australia, which means there is no supervision and no rate cap for bad credit lenders!
The same can be said about business loan brokers in Australia – some of them make promises in vain in order to try and convince unsuspecting business owners into highly expensive personal loans.
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Bad Credit Business Loans Approval Rate Slowly Recovering
The COVID pandemic brought a dramatic halt to SME lending in 2020 and 2021. Business loan approval rates fell dramatically, not least to borrowers seeking bad credit business loans. With online lenders looking to minimise their risk exposure, it was no surprise that bad credit borrowers were the most heavily hit. In response, the Government launched the SME Recovery Loan Scheme but a number of borrowers, including those with bad credit, still found themselves ineligible to qualify (compared with the USA much less capital was issued). With mixed success, this scheme came to an end on June 30th 2022. The good news is that online lenders are now starting to resume lending and volumes are expected to return to pre-pandemic levels by the end of 2022. Bad credit businesses will always have the most trouble in securing finance and should continue to be wary of lenders advertising themselves as “bad credit guaranteed approval”.