Business loans with bad credit

What lenders check

When you apply, the lender checks your business's credit and, for most small businesses, the directors' credit as well. The report shows your repayment history, any defaults, recent credit applications and court judgments.

New Zealand has three credit reporters: Centrix, Equifax and Experian, which was previously called illion. You can get a free copy of your report from each one. If you need it quickly, there might be a fee. Checking your report before you apply means you'll know what the lender will see.

Lenders that look past a low score

Banks often decline applications with recent defaults. Some online lenders care more about how your business is doing now, so they check your recent bank statements or accounting records, and they may lend even if you've had problems before. Because of the risk, they usually charge higher rates and offer shorter terms.

Use the true cost calculator to find the true annual rate of any offer. A loan that costs too much can make cash flow problems worse if the repayments eat into your profits.

Improving your chances

• Order your credit reports. If you find a mistake, dispute it with both the credit reporter and the business that supplied the information.
• Pay off or settle any arrears and overdue accounts.
• Space out your credit applications, since each one shows on your report.
• Have recent bank statements and up-to-date accounts ready, so the lender can see how the business is trading now.
• Borrow only what you need. Smaller loans are easier to get approved and cost less overall.