If you are a small or medium sized enterprise (SME) in Australia with a poor credit history, obtaining a business line of credit or many forms of business funding can be difficult.

There are a range of reasons why you might be seeking business finance with bad credit.

  • Have you missed payments in the past?
  • Has your business defaulted on a loan before?
  • Have you been subject to winding-up actions?
  • Has your business received adverse court judgments?
  • Do the directors or the business itself have a low credit rating?

Any or all of these may signal to banks and financial lenders that providing your business with a line of credit is high risk. This means that receiving approval for a facility such as a line of credit for poor creditworthiness is far trickier.

Does ScotPac offer bad credit business finance?

While ScotPac is the largest non-banking lender in Australia and New Zealand, we offer significantly more flexibility in lending criteria than traditional banking institutions.

Nevertheless, there are still minimum eligibility standards that potential borrowers must meet. When it comes to lines of credit, this financial facility is designed for businesses who can demonstrate a strong history of making payments on time and with reliable turnover on a monthly basis.

Thus, it can be difficult for businesses with bad credit scores to obtain a line of credit in Australia. Fortunately, there are still alternative products that offer more eligibility flexibility to consider.

Make sure to reach out to the ScotPac team today to find out more.

Who is eligible for a line of credit with ScotPac?

At ScotPac, we want our clients to succeed, and we want businesses who take the time and make the effort (notwithstanding our quick online processes) to complete applications for a business line of credit or other form of finance to benefit from increased chances of approval.

That’s why we are upfront and clear about our minimum eligibility criteria:

  • Business ownership
  • Trading history
  • Minimal monthly turnover
  • Financial documentation
  • Minimal financial risk
  • Business Ownership 

All line of credit applicants must be at least 18 years of age. Plus, all applicants and company directors must be either an Australian citizen or permanent resident.

Trading History

To be eligible for a line of credit, your business must be trading for at least 12 months and have records of consistent average sales.

Monthly Turnover

For an approved line of credit, your business will need a minimum turnover of $50,000 per month in total sales with facility limits available up to 150% of your average monthly sales (up to $500,000).

Financial Documentation

During the application process, you will need to provide at least six months’ worth of business bank statements as well as photo ID for directors or borrowers.

Minimal Financial Risk

At ScotPac, we take a wholesome approach to assessing SMEs’ eligibility. Whilst bad or no credit history does not mean you cannot access any form of business funding, lines of credit for poor credit is more difficult to get approved.

How can you improve your credit score for future Line of Credit applications?

There are a few ways in which SMEs can improve their eligibility and creditworthiness over time.

  • Make sure to pay your suppliers, creditors and the Australian Tax Office on time.
  • Work towards reducing your debts wherever possible.
  • Build your positive trading history through alternative funding facilities such as Invoice finance.
  • Maintain your financial documentation and records to be able to demonstrate minimum required turnover.

If you would like custom advice from one of our lending specialists on how you can rebuild your credit profile over time, make sure to reach out to the ScotPac team today on 1300 207 345.

Why is Invoice Finance a better solution for SMEs with bad credit?

While your business may not qualify for a line of credit due to your poor credit history, Invoice Finance may offer a viable alternative.

ScotPac’s Invoice Finance facility allows you to access tomorrow’s payments today by providing a cash advance of up to 85% if the value of unpaid invoices owed to you by your companies.

This funding can then be used to meet operational expenses, seize new market opportunities or, critically, pay down debt and improve your credit score.

Why is Invoice Finance a good solution for businesses with bad credit?

  • Eligibility is based on the creditworthiness of your customers rather than your business.
  • Even SMEs with poor or limited credit history can have locked value in their unpaid invoices which can be leveraged for benefit
  • Approval rates are higher for businesses with less stellar credit histories as the facility is inherently more flexible and scalable

If your business is not ready for a line of credit, but you are interested in understanding more about what Invoice Finance may offer you, make sure to enquire with our team before submitting an application.

Contact ScotPac for custom business advice

For over 35 years, the ScotPac team has been providing custom advice to SMEs across Australia to help fuel their business’s growth.

If you’re worried that bad credit business finance is holding you back and would like to take control of your credit score or seek alternative funding facilities, contact your nearest ScotPac office today.

Frequently Asked Questions

Will ScotPac approve my line of credit application if my business has bad credit?

In most instances, no.

ScotPac is unable to approve lines of credit for businesses with bad credit because of recent defaults or unresolved prior credit issues.

What constitutes bad credit when it comes to business finance?

In general, businesses who have missed payments, defaults, winding-up actions, or a record of court judgments against a company or its directors will be flagged in our approval system as having “bad credit”.

Are there other forms of business finance for SMEs without strong credit history?

Yes. Whilst a line of credit and traditional bank loans have stricter eligibility criteria, Invoice Finance, for example, focuses more on the creditworthiness of your customers than your business.

In some instances, this can make it a better and more achievable option for SMEs with poor or no credit scores.

 

Can I improve my business creditworthiness?

Yes, of course.

With strong and responsible cash flow management, you can make payments on time and in full, clear your debts, maintain accurate financial records, and ensure consistent monthly turnover. All of this, over time, will enhance your eligibility for a business line of credit.