Bad Credit Business Loans: 8 Warning Signs a Lender isn’t Right for You

Sometimes a business can just spiral out of control financially, despite all the owner’s best initial efforts. This is reality, as markets can dry up, or unexpected expenses hit and compound one after the other. Growth problems are another big reason for a business to become cash strapped — from buying property and equipment in anticipation of expansion that never takes place — to being over-run with expensive inventory you can’t sell.

Bad credit business loans - in AUD

Regardless your individual reasons, you now find yourself faced with a bad or poor credit rating and an uncertain financial future for your company, which you’re sure can be fixed with a bad credit loan. The banks won’t touch you, so a high-risk lender is your only hope.

How possible is it to be accepted with really bad credit?

With a banking institution, your chances are all but zero that they’ll sign a check over to you. With “reputable” high risk lenders who specialize in bad credit loans, your chances go up, but don’t apply for such a loan and expect the best outcome if you have a really bad credit score.

In general, anything below a 600 (ie., poor credit) is going to really hurt your chances at getting a loan with most lenders, let alone a loan with a decent interest rate. A bad score falling below 500 will be much, much harder to obtain a loan with — if you do get accepted, interest rates are likely to be very high if you’re successful.

Warning signs a lender isn’t right for you

These are the signs that tell you not to sign up with a particular bad credit business lender:

1. They demand upfront fees

Even most of the scammers out there have evolved and stopped trying to eek money out of cash-challenged people by asking for upfront fees. However, there are still plenty of fly-by-night shady lenders who’ll demand upfront payment under the veil of admin fees, processing costs, credit check fees, and other reasons to get you to pay something before you even know if you’re getting the loan or not. Once you hand over the money, you’re unlikely to hear from them again.

All bad credit business and personal loans will have fees attached that you’re obliged to pay. However, these fees are typically included in the balanced owed once the loan is funded.

2. Unbelievable rates are promised by the lender

If it sounds too good to be true… If it walks like a duck and talks like a duck… Basically, you need to be well aware of the interest lenders are charging for both good and bad credit business loans at the time you’re looking, as they relate to the repayment terms being offered.

Be very suspicious of any lender offering rates or terms that are way below that of their competitors, as there’s only so low they can go and still be profitable.

3. The online lender doesn’t have a physical address

Some bad credit lenders operate solely online and don’t offer a physical address you can visit to talk about your loan. That’s fine, provided their reputation checks out. But, while a lender may discourage visits to their headquarters, you want to make sure they do have a verifiable headquarters offline.

Otherwise, you could be dealing with some kid living in their parents basement and run into heaps of problems!

4. Lenders with unprofessional contact details

For instance, you look in the Sunday paper and see an ad promoting bad credit/no credit loans when you contact Even worse, Yahoo or Hotmail accounts! Regardless, no lender worth doing business with would put their name out there with a non-professional email address.

Not to mention, if they’re not promoting the idea of calling them (so they can actually talk with you), this is a definite warning sign to be wary of.

Loan approval guarantee - really?

5. The lender guarantees acceptance

Now, if an ad says “guaranteed approval for qualified applicants” that’s just smart marketing. However, lenders who make flat guarantees without knowing your credit history or having access to your business’s balance sheet have no business guaranteeing approval.

6. Lenders who cold call your business

Cold calling a business to see if they need a loan is a dead giveaway that someone is looking to scam you in one way or another. Lenders with scruples would never do this, as Australia is so rife with businesses operating in the red, they really only need to advertise on Google and the occasional print ad in order to get all the applicants they need to stay in business.

This goes double for those shoddy credit repair agencies that call incessantly — it’s well known that credit card companies and banks aren’t going to reach out to you or anyone else to help you with money issues.

7. The lender offers a loan you know isn’t right for you

This is why it’s so important to make sure you’re armed with good information before filling out an application. For instance, if you need money quickly, have great credit, and you want to play it safe and pay back the loan over time to avoid high interest rates, the loan officer should be amenable to you taking out a low monthly interest business loan.

When they see you qualify for an unsecured loan at a much higher interest rate, a greedy loan officer might try to sway your decision, telling you whatever you want to hear in order to seal a more lucrative deal for their business.

8. They push hard like a car salesman

Lenders want your business indeed, that’s how they stay in business. However, as mentioned, a quality lender with a good reputation won’t put much effort into harassing you for your business. One or two well-spaced follow up calls is normal. Anything beyond that, combined with frequent letters and an overall pushy attitude is grounds for skepticism.

Scammers rely on pushy tactics and too-good-to-be-true deals to lock you into something shady; legitimate companies make their daily bread by offering sensible loan packages you can reasonably be expected to pay back on time, and are never pushy about it.


Of course there are some really good lenders out there. What you need to do is find as much information as possible about the lenders, and start analyzing them to learn more about their reputation, services, and so on. Also, seek for recommendations from your trusted contacts to learn more about their experience working with the lenders.

Once you’ve built your list, you can start choosing the most suitable one for your business.


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