Can I get a business loan with a CCJ?

If your business has a County Court Judgment (CCJ) against it, you might be wondering if you can still access funding. The good news is that having a CCJ doesn’t automatically disqualify you from getting a business loan. However, it can make securing finance more challenging. Here’s what you need to know.

What is a CCJ?

A County Court Judgment (CCJ) is a legal decision issued against an individual or business that has failed to repay a debt. It is recorded on your credit file and can remain there for up to six years unless paid within 30 days.

A CCJ can negatively impact your credit score and make lenders cautious about offering finance. Some lenders will consider businesses with County Court Judgments, but they will assess factors such as payment history, financial health, and how the CCJ was managed before making a lending decision.

Can I still get a business loan with a CCJ?

Yes, it is possible to get a business loan with a County Court Judgment, but it depends on several factors, including:

The age of the CCJ

The impact of a County Court Judgment on your ability to secure a loan decreases over time. If the CCJ was issued several years ago and has been satisfied (paid off), some lenders may be more willing to approve your application. However, if the CCJ is recent and remains unpaid, securing finance may be more difficult. Lenders will assess whether your financial situation has improved since the CCJ was issued.

Loan amount and type

The type of loan you apply for can determine whether you will be approved despite a CCJ. Secured business loans, which require assets as collateral, are more accessible for businesses with CCJs because they reduce the lender’s risk. Unsecured loans, on the other hand, may be harder to obtain and come with higher interest rates due to the increased risk to the lender.

Business performance

Lenders will consider your business’s overall performance when reviewing your loan application. If your business has strong financials, such as healthy cash flow, consistent revenue, and good profit margins, lenders may overlook a past CCJ. Demonstrating steady growth and a responsible approach to managing finances can improve your chances of securing a loan.

Alternative finance options

If traditional bank loans are not an option due to a County Court Judgment, there are alternative finance solutions available. Specialist lenders, invoice finance providers, and asset-based lenders may be more flexible with their lending criteria. Exploring these alternatives can provide your business with the funding it needs, even if a CCJ is on your credit record.

What types of business loans are available with a CCJ?

Secured Business Loans

Secured loans require you to offer assets such as property, vehicles, or equipment as collateral. This reduces the lender’s risk, making it easier for businesses with CCJs to secure funding. However, failure to repay the loan could result in the loss of these assets.

Unsecured Business Loans

Unsecured loans do not require collateral, making them riskier for lenders. As a result, businesses with CCJs may find it difficult to get approval for an unsecured loan, and if they do, interest rates are typically higher to compensate for the risk.

Invoice Finance

Invoice finance allows businesses to access funds by selling outstanding invoices to a lender. This option is useful for businesses with a CCJ because it focuses on the value of invoices rather than credit history. It provides quick access to cash flow without taking on traditional debt.

Merchant Cash Advances

A merchant cash advance allows businesses that accept card payments to receive a lump sum based on future sales. Repayments are taken as a percentage of daily card transactions, making it a flexible option for businesses with fluctuating revenue.

Guarantor Business Loans

A guarantor loan requires a business director or third party with good credit to act as a guarantor. This provides lenders with additional security, increasing the chances of approval even if the business has a CCJ. The guarantor is responsible for repaying the loan if the business defaults.

How can I improve my chances of getting a business loan with a CCJ?

1. Pay off the CCJ

If you can afford to, settling the County Court Judgment is one of the most effective ways to improve your creditworthiness. Once paid, you can apply for a “satisfaction certificate,” which updates your credit file and reassures lenders that you have taken responsibility for the debt.

• Paying the CCJ within one month: Paying off the full amount within one month gives you the opportunity to have the judgment removed from the public register, improving your credit outlook.
• Paying the CCJ after one month: If payment is made after one month, the judgment will show as ‘satisfied’ but will still remain on the register for six years, indicating that the debt was paid but still affecting your credit.

2. Provide strong financials

A lender will look beyond your CCJ and assess your business’s overall financial health. Providing clear evidence of stable cash flow, increasing revenue, and profitability can help convince lenders that your business is capable of repaying a loan.

3. Use a specialist lender

Some lenders specialise in providing finance to businesses with poor credit histories, including those with CCJs. These lenders understand the challenges of adverse credit and may offer more flexible repayment terms and eligibility criteria.

4. Offer collateral

If you can offer collateral, such as business assets or property, lenders may be more inclined to approve your loan application. Having security reduces the lender’s risk, making them more willing to lend despite a CCJ.

5. Consider alternative finance

Traditional loans are not the only funding option. Invoice finance, merchant cash advances, and asset-based lending provide alternative routes to securing the capital your business needs without relying solely on credit history.

Will a CCJ affect my business credit score?

Yes, a County Court Judgment will negatively impact your business credit score, making it harder to secure funding. However, its effect diminishes over time, especially if it has been settled. Lenders also consider other factors, such as your company’s recent financial performance and payment history, rather than just the presence of a CCJ. Regularly checking your business credit report and addressing any issues can help improve your credit profile over time.

Our final thoughts

While a County Court Judgment (CCJ) can make getting a business loan more difficult, it’s not impossible. Many lenders specialise in helping businesses with adverse credit. By exploring the right options and taking steps to improve your financial profile, you can still access the funding your business needs. If you’re unsure where to start, we can help you find and compare lenders willing to consider your application.