Yes, you can get business finance with a CCJ. Lenders usually request that you arrange a type of repayment plan to settle the debt with the creditor as a condition of them lending to you.
In particular, all sorts of businesses can get stuck in a rut where they’re unable to make certain payments, which in some cases may lead to a CCJ (County Court Judgment).
Some CCJs are more severe than others, but it doesn’t have to tarnish the reputation of the director in the long run, or be a barrier to raising funds — business finance with a CCJ can still be possible to arrange.
What is a CCJ – County Court Judgment
A county court judgment or CCJ as it is referred to is an order from the court to make payment to the claimant. Failure to do so will result in a default being registered on your personal or business credit file / report.
To get to this stage you will have received a number of letter and requests for payments from your creditors, this is one of their final ways to get payment from you or your business.
When you received a CCJ, it means the court has formally decided that you owe money, and you have to pay up. The ruling will clarify how you have to pay (e.g. a lump sum or in instalments), and specify formal deadlines for the payments.
CCJs are recorded on your credit profile, generally for a period of up to six years, unless you pay the full amount within one month of receiving the CCJ — which means there’s a great incentive to pay as soon as you can. CCJs can even affect the Directors of Limited Liability companies. Any viable business can get a CCJ, but in the more serious cases, it may be a warning sign of a business in distress.
Why CCJs can be a problem
What problem will a CCJ have if I apply for business finance. The main reason most business finance is rejected is due to advertise credit. A CCJ will lower your credit score, and appear on your records. When the underwriter checks your profile or if they search for your business on companies house, they’ll be able to see the CCJ and the amount. It may even extend to your suppliers — modern credit control applications means they can view recent CCJs and decide whether or not to extend credit to you.
Naturally, a CCJ reflects badly on a business. The question the underwriter or creditor will be asking themselves is: “if this business has a history of struggling to make payments, why should they be trusted to make repayments on a loan from us?” However, it doesn’t mean you’re automatically ruled out of securing business finance or other forms of credit.
Types of Business Finance with adverse credit history
1. Invoice Factoring
Invoice factoring with a CCJ is a way for businesses to raise money by selling invoices to a factoring company at a discount. Factoring usually includes credit control services, and helps companies release cash from their debtor book. In order to use this type of business finance, you must deal with other businesses and not consumers.
- Factoring is the ideal solution for businesses looking to save time chasing payments.
- It releases up to 90% of the value of your unpaid invoices the moment you issue them to your customers.
- You will have the full support of a dedicated relationship manager and access to your own online account to enable you to view your facility whenever you need to.
- A discreet and friendly credit management team will collect payments on your behalf giving you more time to focus on the day-to-day running of your business.
1. Merchant Cash Advance
Merchant cash advances with a CCJ many many positives for businesses to take advantage of. Every business owner runs into the need for working capital from time to time. But where do you go to get it, especially when your bank won’t even consider your funding request? There is a finance solution for businesses that take credit cards & debit card payments.
In fact, you could get cash from the sales you haven’t even made yet. Turn tomorrow’s credit card & debit card sales into today’s cash flow. There is no faster, safer or easier way to get unsecured business funding. The merchant cash advance is classed as a short term working capital loan. This is because they have a term time of a maximum 18 – 24 months. Your business must also accept card payments and be trading for six months.
The amount of money you are offered from a lender will be based on your average monthly card sales. Typically the more money you make each month, the more money you will be able to borrow.
When it comes to repay the loan, business cash advance repayments are taken automatically as a small percentage of future card sales. For each customer card transaction your business processes using a designated terminal, a small amount will be automatically withdrawn.
This type of funding offers businesses an instant cash injection between £5,000 and £200,000. You can then repay the money comfortably, using a small percentage of future customer card payments.
- Access £5k to £200,000
- Funding in as little as 48 hours
- Get up to 150% of your monthly card turnover
-
Flexible repayments
2. Business Credit Cards
Business credit cards with a CCJ can be an appealing option for startups as well as more established businesses that want the flexibility of a credit line they can tap when needed. We cited earlier this you that Capital on tap allow a credit facility up to £100,000 with 56 days interest free on card purchases. They offer great interest rates from as low a 9.9% APR.
3. Crowdfunding
Ever wondered what Crowdfunding is? this type of funding option allows you raise money online from backers who are interested in supporting small businesses.
There are several types of crowdfunding available, including:
- Commission-based: You offer a tangible commission for those who contribute to your campaign
- Equity-based: You give others the opportunity to invest in your company, often by offering shares in your company.
- Lending-based: You borrow money that will be repaid back.
Finding the right platform and crafting an effective campaign to win investors takes work, but the fact that you have business that just has hit a stumbling block may be appealing to some backers on these platforms as they can see a history unlike startups.
4. Merchant Cash Advance
Merchant cash advances with a CCJ many many positives for businesses to take advantage of. Every business owner runs into the need for working capital from time to time. But where do you go to get it, especially when your bank won’t even consider your funding request? There is a finance solution for businesses that take credit cards & debit card payments.
In fact, you could get cash from the sales you haven’t even made yet. Turn tomorrow’s credit card & debit card sales into today’s cash flow. There is no faster, safer or easier way to get unsecured business funding. The merchant cash advance is classed as a short term working capital loan. This is because they have a term time of a maximum 18 – 24 months. Your business must also accept card payments and be trading for six months.
The amount of money you are offered from a lender will be based on your average monthly card sales. Typically the more money you make each month, the more money you will be able to borrow.
When it comes to repay the loan, business cash advance repayments are taken automatically as a small percentage of future card sales. For each customer card transaction your business processes using a designated terminal, a small amount will be automatically withdrawn.
This type of funding offers businesses an instant cash injection between £5,000 and £200,000. You can then repay the money comfortably, using a small percentage of future customer card payments.
- Access £5k to £200,000
- Funding in as little as 48 hours
- Get up to 150% of your monthly card turnover
-
Flexible repayments
5. Bridging Loans
Bridging loans with a CCJ are used to finance the gap between when you need to pay to purchase something, but you’re waiting for funds to become available from the sale of another property or a long term business loan to be approved. Bridging loans are secured loans. This means you have to have a high-value asset to get one, such as a property or land.
When you apply for bridging finance, the lender adds a ‘charge’ to the property you’re using as security. These charges set the priority of debts if you can’t repay your loan. If a property was seized and sold to pay off outstanding loans, a first charge loan would have to be paid first before a second charge loan could be paid back. This is a quick turnaround on this type of loan and can be in place within a week.
Pros
- You’ll receive money quickly
- You can borrow a large sum of money
- You can have a lot of flexibility if needed
- It is secured against your home, so could risk losing your home
- Interest rates for bridge loans can be petty high
- Bridge loans come with a lot fees attached, so it can be a costly
6. Small Business Loan
A small business loan with a CCJ is a form of business financing that enables small businesses to fund their daily operations costs with a set interest rate. Term loans or bank loans as the are called are often provided by a lender or high street banks and is usually secured against an asset, sometimes finance providers simply just ask for a personal guarantee if the borrowing is unsecured.
When business owners borrow money from a lender, a repayment plan is agreed as part of the lender’s terms of agreement. The money then gets paid back, with interest, in scheduled monthly payments over a pre-agreed repayment period.
There are two main types of small business loans in the UK:
- Unsecured business loans
- Secured business loans
Increase your chances of getting business finance with a CCJ
Pay it off immediately
The best thing you can do to increase your chances is satisfy the CCJ immediately, and pay it off. It shows that it’s a temporary blip, but you reacted when you most needed to, not to mention that it won’t stay on your record as long if it’s paid off within a month.
Learn from past mistakes
Be prepared to show how the business has learnt from the CCJ, and is making current payments on time — anything that indicates stability makes your business more attractive to the lender.
Make sure the time is right
The more recent the CCJ, the more it will worry potential lenders. In some instances, especially if you received one of the more severe judgments, it may be better to wait a while before looking for business finance.
Take CCJs and bad credit seriously
Don’t accumulate a number of CCJs. It reflects very poorly on your company, and it will lower your credit score. Worse, it shows a lack of concern for your payment obligations.
Have it set aside
You may have just found out that your company has a County Court Judgment. This may have happened if the claim form was posted to a former address or registered office. If this is the case you can apply to have it set aside with a N244 form.
Use security
Use any valuable assets you or your business have to secure finance. This helps lower the risk for the lender, making your business a more appealing proposition.
Use Finance Brokers
Going through an intermediary like Invoice Funding means you’ll be able to make use of our good relationships with different lenders. We listen to understand your whole story, the reasons behind the CCJ, and work to present your case to lenders in the most compelling way.
Overall, if there’s one thing to take away from this article as a business-owner with a CCJ, it’s this — CCJs are serious, but they don’t have to ruin your chances of securing funding.
If you have suffered a CCJ and would like help arranging business finance with a CCJ please view our website.
Read more: How to get Government Grants
Frequently asked questions
Can I secure business finance if I have a CCJ?
While having a CCJ can make it more challenging to obtain business finance, it's not entirely impossible. Several lenders specialize in providing funding options to businesses with CCJs. It's crucial to research and approach these lenders who are willing to consider your application based on other factors like your business's performance, collateral, or a solid repayment plan.
How can I improve my chances of getting business finance with a CCJ on my record?
To enhance your chances of securing business finance with a CCJ, focus on rebuilding your creditworthiness. Start by ensuring that your CCJ is satisfied and marked as satisfied on your credit file. Maintain a healthy credit score by making timely payments on other debts and bills. Additionally, consider providing collateral, presenting a strong business plan, or seeking a guarantor to increase your chances of approval.
Are there alternative funding options available for businesses with a CCJ?
Yes, there are alternative funding options for businesses with a CCJ. For example, you can explore invoice financing, where you use your outstanding invoices as collateral to secure funding. Crowdfunding and peer-to-peer lending platforms may also be viable options. Furthermore, building a strong relationship with your existing suppliers or seeking investment from business partners could help you obtain the necessary funds without relying on traditional lenders.
Conclusion
Getting business finance with a County Court Judgment can be challenging, but it is not impossible. A CCJ is a legal judgment issued by a court against an individual or business that has failed to repay a debt. Lenders and financial institutions are generally cautious when dealing with applicants who have a CCJ on their credit record, as it indicates a history of non-payment.
However, some lenders specialise in providing finance options to businesses with CCJs. These lenders may consider factors beyond the CCJ, such as the overall financial health of the business, its profitability, and its ability to generate future cash flows. It is important for business owners with a CCJ to be prepared with a solid business plan, financial statements, and a convincing explanation of the circumstances leading to the judgment.
Demonstrating a commitment to improving creditworthiness and implementing responsible financial practices can also help increase the chances of securing business finance, despite the presence of a CCJ.
Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.