Small Business Survival: Funding Solutions for Bad Credit and No Guarantor
By Anna Johnson 24-11-2025 43
Want a loan but cannot get it due to bad credit history? It is hard to get a loan due to past credit mistakes, like missed payments, loan defaults, or bankruptcy. Traditional loans rely on good credit history, finances, and personal guarantees.
However, you cannot ignore the general business requirements. Thus, exploring the possibilities to get a loan without guarantees or a guarantor should be the priority. The blog lists some aspects that may help you fund your needs without worries.
Can you get a business loan with bad credit and no guarantor?
It is difficult to get very bad credit loans with no guarantor from a direct lender online. It is because poor credit itself reveals the borrower's inability to manage finances well. Thus, a loan company demands additional security, such as a personal guarantee or guarantor, on the loan.
It serves as the collateral or the proof of payment if the primary borrower fails to pay the dues. However, you can try some sources, like invoice finance, to get a loan.
Why may you need a loan without a personal guarantee?
You may need a loan without a guarantor to avoid the additional hassle of staking your personal and business relationships. Here are other reasons:
• You can demonstrate the creditworthiness for the loan
• You can afford to repay the dues on time
• Have a strong financial record and revenue potential
• You need only a small amount
• You don’t want to stake your personal and business assets
Which funding solutions do not require a guarantor?
There are several options available for businesses without the need for a guarantor/ personal guarantee. However, the right choice depends on how you operate, how you take payments from customers, and what you need to use the funds for. Here are some examples of the business products that you may get without personal guarantees:
1) Asset Finance
Asset finance allows you to borrow money against the existing business assets. It could be business vehicles, equipment, intellectual property, office, etc. It is a good option when you want to invest in an asset without affecting the cash flow. It may help you get a high amount despite bad credit. You may get instant approval as the business asset acts as a security.
Most suitable for:
Businesses needing vehicles/ machinery
Pros:
Easy approval for bad credit
Spread the cost of equipment purchase
No guarantor required as the asset acts as security
Cons:
The fear of asset repossession under non-repayment stays
Overall cost may be higher over time
2) Unsecured business loans
These loans are not secured against any asset and hence are known as unsecured loans. The interest rates are more competitive than secured loans here. You do not need to provide a personal guarantee if you can afford the loan payments.
You can get £5000-£5,00,000 depending on your credit score, cash requirement, and personal guarantees. Individuals with better finances, improved credit scores, and revenue may get better interest rates.
Most suitable for:
Establish businesses with consistent revenue
Owners who don’t want to risk their business assets.
Pros:
No collateral is required
Fast approval from alternative loan providers
Flexible repayment terms
Cons:
Harder to qualify with bad credit
High interest rates
May require strong cash flow
3) Invoice Finance
It is a way of getting a loan against the pending client invoices. If you cannot wait for the client's payment, leverage your invoices as collateral. You may get up to 80% of the invoice value as the amount for your needs. They release the remaining amount when the customers pay off. You can repay the dues when the customers pay them off.
Most suitable for:
Businesses with large unpaid invoices
Businesses experiencing low cash gaps between work done and payment
Pros:
Approval is not dependent on credit scores
You may get fast access to cash
Flexible repayment term
Cons:
Harder with a bad credit score
Higher interest rates for individuals with low credit profiles
May require strong finance and cash flow
4) Business Credit Cards
In this, a company can borrow up to an allowed limit and repay the dues in a month. Most business cards come without a personal guarantee. It is especially for individuals with a good credit score. You may get an offer for fast, flexible short-term funding for everyday expenses. It comes with the added benefit of protecting your personal assets.
Most suitable for:
Ideal for funding day-to-day expenses
Ideal for emergencies or small purchases
New businesses engaged in building a credit score
Pros:
Quick approval
Helps build business credit
Useful for short-term expenses
You may get one with a fair or bad credit history
Cons:
Harder with a bad credit score
Higher interest rates
May require strong cash flow to qualify
5) Merchant Cash Advance
It is a type of finance where a lender advances you money, and you repay through a fixed percentage of your future debt/credit card sales. Unlike traditional loans, it does not have interest rates or fixed monthly payments.
You can repay the amount in a flexible repayment term. The amount you pay is tied to your sales volume. The higher the sales, the more comfortably you can repay the dues. Moreover, you don’t need to provide collateral to qualify.
Most suitable for:
It is ideal for businesses operating in retail, hospitality, salons, e-commerce, or any business with steady card revenue
Ideal to use in case of cash fluctuations
Pros:
One may get it easily with a bad credit score
It does not have a fixed repayment structure. Instead, you repay when you can
Repayments are according to sales
You may get the loan within 24-48 hours
Cons:
It is costlier than other traditional loans
Only ideal for businesses with credit card sales.
Small repayment terms
How to choose the right alternative financing solution?
Here are some ways to pick the right business loan type for your needs. Otherwise, it may not help you meet the requirements. Here is how to choose the right type of small business funding for bad credit scores:
1. Identify the funding purpose
Different finance types are designed for different business purposes. Here are the right finance types to use for a specific purpose:
Cash flow gaps: merchant cash advance, invoice finance
Buying equipment/vehicles: asset finance
Short-term expenses or flexibility: business credit cards
Growth, expansion, or larger investments- unsecured or secured loans
2. Evaluate your credit score
A credit score plays an important role in getting the best interest rates. The better the credit score, the better the terms you may receive. Here is what business finance type you can get access to according to your credit score:
Bad credit: MCA, invoice finance, asset finance
Fair credit: Unsecured loans from alternative loan providers
Good credit: High street loans, business credit cards
3. Decide whether you can provide security
Some loan providers require you to provide collateral or a guarantor.
No assets required: invoice finance, unsecured loans
Asset-based finance: secured loans, asset finance
Bottom line
Thus, you can check and benefit from these business survival solutions. Identify the type of finance suitable for your needs according to credit score, amount needed, revenue, cash flow, etc. It will help you meet your needs without worries. Always check the eligibility criteria and documents.
Tags : Small Business Bad Credit
