Small loan for Business start up but bad credit

kirsty000

Ive got bad credit rating and I am wanting a small loan of £6000 to start up a business, is there anywhere that is likely to lend this amount to someone with a bad credit score?

fc123

kirsty000 wrote: »

Ive got bad credit rating and I am wanting a small loan of £6000 to start up a business, is there anywhere that is likely to lend this amount to someone with a bad credit score?

I am going to be really boring here...but I would advise getting your personal finances back on track (or if they already are) and keeping everything in order. Your credit score will improve in time.

FWIW, I would advise saving at least HALF the ammount you need, if not all as then you only risk your savings.

I write from experience; I borrowed a large sum to put into an add on venture to our business. It went wrong. It could have taken the whole thing down as, then the debt had to be repaid.

My BIL has just lost £80k on new venture. It was all his savings BUT had it been borrowed, itcould have been a disaster.

resultofmygeneration

Hi, I’m in the same position, just starting a business but absolutely need £8000 loan to get equipment etc. and again have a bad credit score. Just been turned down by Alliance and Leister but appealing against decision, fingers crossed. Basically if you have a bad credit score you need to offer the bank another form of security. The advice I was given was to get a guarantor, obviously some one with good credit history and could offer greater security e.g. my mum who is a home owner. The other thing was the small firms loan guarantee. The following was taken from http://www.bytestart.co.uk/content/finance/funding/small-firms-loan-scheme.shtml

For small businesses that need capital to get started or grow, there is a government-backed scheme to make it easier to borrow money. The Small Firms Loan Guarantee Scheme is particularly useful for businesses that have been turned down for loans elsewhere, because they don’t have enough assets to secure the loan. It’s backed by the snappily-titled Department for Business, Enterprise & Regulatory Reform, which replaced the DTI. You borrow from one of a number of approved lenders. The government guarantees 75 per cent of the loan amount. That will cost you a two per cent premium on the outstanding balance of the loan. You can borrow between £5,000 and £250,000 for up to 10 years. But your business must turnover less than £5.6 million, and be under five years old. The scheme is a huge help for growing small businesses, but still comes with the usual warnings. Some banks may be reluctant to lend on the scheme until they have exhausted their other lending options, including overdrafts, mortgages and even invoice factoring. You will still need to put up some security for the 25% of the loan that isn’t guaranteed by the government. If your business doesn’t have appropriate assets, that could include your home, which will then be at risk if you default on the loan. The lending bank will also carry out a credit check on you and your business.

Sorry if you’ve already heard this before, hope it helps and if anyone has got any other advice please let me know. The only other option is continue working and keep finances in order, don’t carry on making credit applications and usually about 6 months - 1 year, credit score will be a lot better! Good Luck!

COOLTRIKERCHICK

to be honest i think it might be extremely hard to get a loan for 6k, you might think it is a small loan, but at the moment with the banks being super carefull this is not a small amount especially for a new business...

i opened a bank account in september, and in january i asked for a 2.5k loan to buy a second hand van....and i tell you what you would swear i was asking for the crown jewels....

before this time i had bought any equipent and money outlay/cash flow out my own money etc... to get the business up and running and to run the business in the early stages where there was more outging than incoming...

so it wasnt as though i had put no money into the business..

the only thing i can suggest, which has allready been mentioned earlier is try and raise as much money as you can...either the full amount, or even half the amount, to show the bank you are serious, and prepared to commit financially using your money..

sell unwanted items on ebay/carboot sales, anything...( legal of coarse) to raise the money...quicker...

good luck...

motorguy

Looking at it from the banks perspective, would you lend £6000 to someone with a bad credit history?

The other way they will look at it is how much of your own money are you risking in this business venture? As someone has said, the more of your own money they see the more chance you have.

Its going to be very hard to get the money.