Funding with a CCJ

It is still possible to get a business loan even if you are subject to a CCJ by going to a specialist lender.

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Funding with a CCJ

What is a CCJ?

A CCJ is one thing you never want to get as a business owner. It stands for County Court Judgement and is issued by the courts if you renege on an outstanding business loan or purchase payment. A court can effectively demand payment if you owe money to creditors or lenders and still haven't cleared the debt after formal warnings. Unless you remove the debt within thirty days, the court judgment will remain on your record for up to six years. This will make it much harder if you are borrowing money in the future.

The ruling will state how long you have to pay it back and specify formal repayment deadlines. Unfortunately for business owners, CCJs are recorded on your credit profile unless you repay the total amount within one month of receiving the court order.

You can access further information about CCJs on the government's website or search for details of any CCJs against you on the register of judgments.

Why having a CCJ is a problem?

When a lender decides to issue a business a loan or not, they will consider your credit score. One of the primary eligibility criteria a lender will have is that you don't have a history of bad credit. Credit histories of businesses can be negatively affected by a CCJ, and a lender will be able to see what amount is owed and if any effort has been made to clear the CCJ. Lenders will consider a CCJ as evidence that the business is in distress. 

It could also be the case that suppliers will check a CCJ and decide whether it's too risky for them to extend any further credit to you. Remember that a CCJ doesn't necessarily rule a business out of financing. But it will be more complex, and most likely, you will have to pay a higher interest rate.

How to get a loan with a CCJ?

In essence, only three options are open to you as a business owner with an open CCJ. First, you pay the judgment, and all funding options will be available again. Second, you can try to have the CCJ excused, involving going to court to explain why you don't owe the debt in question with the help of a solicitor. Or, third, you can seek a loan with a CCJ.

The lending market is diverse. Many lenders understand that a business with a CCJ might still have a viable business model and the ability to repay a new loan. It might have been an unforeseen cash flow issue that resulted in the CJJ. For example, a key customer missed a large payment, resulting in debt accumulation. Niche lenders can work with a business and look at the entire business and its plans for the future and not just the details on a credit file.

Funding options with a CCJ

Of course, having a CCJ attached to your business is not ideal, but different options are still available.

Secured loans

secured business loan is a type of loan where the borrower uses company assets as security. This is sometimes referred to as asset-backed lending. Business owners will usually put forward property plant and machinery. Other types of secured lending include invoice finance, where accounts receivable are discounted for upfront cash.

When assessing a business owner's eligibility for a new loan, lenders will consider any existing CCJ. However, if valuable assets are used as collateral, it will reduce the risk exposure for the lender, and it might be possible to secure a new loan. Before contacting a credit broker or lending platform, always ensure that they are authorised and regulated by the financial conduct authority. Suppose the financial conduct authority does not regulate the lender. In that case, they risk having lending practices that aren't in line with prudential regulations from the Financial Services Authority (FSA).

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Unsecured loans

An unsecured loan is generally not supported or secured against a company asset. As such, this poses a much higher risk to the lender, given that they have no guarantee of getting their money back. Indeed, this is the main reason why unsecured loans carry higher interest rates. Also, the loan amounts you can apply for will be much smaller, and the repayment period will spread over a shorter time frame.

A loan applicant's eligibility will be assessed based on the company's trading position. Often, a lender will specify the loan amount as a multiple of turnover. This is one way of estimating the likelihood of a borrower repaying a loan, despite carrying a CCJ from previous business affairs.

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Bridge loans

While unsuitable for long-term business financing, a bridge loan provides you with fast cash (12 months or less) to cover cash flow gaps while seeking alternative longer-term financing options.

 A bridge loan is short-term financing (typically 12 months or less) that provides an immediate cash boost while you wait for longer-term funding. With a CCJ, it might be the case that the interest rates on offer are higher. However, clearing the CCJ before applying will count towards your bridging loan application. Similarly, for asset finance, a lender will always consider if you have recently removed an existing CCJ. If not, the rates and repayments terms will be much less favourable.

Looking for finance?

Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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How do I apply for a business loan with a CCJ?

Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness, with all quotes being subject to status and income.

Our award-winning platform, Funding Cloud(™), accurately and quickly matches businesses with the right lender and finance option for their needs. From unsecured business loans to revolving credit facilities and a merchant cash advance, we work with over 120 lenders offering dozens of lending products. Apply for funding in minutes - our record from application to credit approval is just 20 seconds, and cash in the bank within as little as 18 minutes. 

Apply today to get the funding you need to trade, plan, and grow with confidence.

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Simon Cureton

Chief Executive Officer

Simon has been Chief Executive Officer at Funding Options since 2019, spearheading its transformation into a leading fintech with the launch of its Funding Cloud platform. Simon has over 27 years of experience in financial services, having held senior posts at some of the biggest players in the industry all over the world.

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