Many business owners assume that in order to get a business loan, they must have a good credit score. Although this is a consideration, having a bad credit score does not mean that getting a business loan will be difficult. While traditional banks often rely heavily on credit history when assessing loan applications, alternative lenders, fintech platforms, and government-backed schemes offer more flexible options for entrepreneurs and business owners with poor credit. This time SMEBROTHER will tell you how a bad credit score can still get a business loan in Hong Kong.
How does a business loan work?
A business loan is a type of financing used by businesses to cover operational costs, expand, purchase equipment, or manage cash flow. Business owners need to apply for loans through banks, online lenders, or government-backed schemes. Several financial documents are required, such as business registration, bank statements, profit and loss statements, cash flow statements, and sometimes a business plan. The lender then reviews your business performance, debt levels, collateral, and credit score. They determine your risk level and decide whether to approve your loan and on what terms.
How to get a business acquisition loan?
To get a business acquisition loan in Hong Kong, you need financial preparation, financial planning, and understanding of local lending options. Lenders want to see if your business is financially stable and profitable. You will need to show financial records for the last 2-3 years, information about assets, liabilities, and debts, or your overall professional business valuation.
A Comprehensive Guide to Small and Medium Enterprise Loans
Prepare a solid business plan with business overview and goals, acquisition costs and terms, revenue and profit projections, loan repayment plan, and operating structure. Explore funding options in Hong Kong through traditional banks, SME financing guarantee schemes (SFGS), or alternative lenders. Submit the loan application with full business documentation, be ready for questions about your experience, business risk, and repayment capacity.
How can I get a business loan with bad credit?
Getting a business loan with bad credit is challenging, but not impossible. Some traditional banks may hesitate, but there are alternative paths you can take. Understand why your credit is low, like defaults, late payments, high debt, etc. Be ready to explain your situation to lenders, especially how you tackled the issues from the past. Although traditional banks often reject applicants with bad credit, non-bank lenders and fintech platforms are more flexible. Look for lenders who focus more on your business cash flow, invoices, or sales performance.
Options for getting a business loan with bad credit in Hong Kong
Here are some options for getting a business loan with poor credit in Hong Kong:
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Alternative and fintech lenders
Look for lenders who are more flexible and focus on cash flow or business performance rather than your credit score. SMEs with stable revenue or a strong sales history still have a chance of getting loans, sometimes with short terms and fast approval. You can also use asset-based financing by showing invoices or purchase orders, demonstrating your business has assets that can guarantee your loan compliance. However, with this method, expect higher interest rates and shorter repayment terms than other lending methods.
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Government-backed SME financing scheme (SFGS)
The SFGS offers 80-100% loan guarantees through HKMC and local banks, minimizing collateral needs and credit score dependency. Several banks participating in this program: BOC, CCB Asia, and livi, offering unsecured loans with quick processing. The 100% guarantee loan supports borrowing up to HK$9 million with a long term and interest at prime 2.5%.
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Unsecured bank loans with relaxed credit checks
This is a business loan that does not require collateral and has less stringent credit checks than traditional bank loans. This makes them accessible to businesses that have poor or limited credit history, as long as they meet certain criteria. The key characteristic is simplified credit assessment by considering your cash flow, bank transactions, or government loan guarantees. The loan has faster approval, can often be approved in 24-72 hours. Because there's no collateral and a higher risk for the lender, interest rates are higher than secured loans.
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Business-specific lending options
This method refers to targeted loan products that are designed for particular types of business or revenue models such as restaurants, retail merchants, or service providers. The lenders assess your business activity such as sales transactions or invoices. These loans are ideal if your business has poor credit but strong daily or monthly revenue, you accept card payments, or you have outstanding invoices or receivables. Some examples in Hong Kong for this method are BEA - Enterprise Easy Fund with loan amounts up to HK$ 2 million.
Key tips for bad-credit borrowers
Avoid applying to too many lenders at once, because multiple hard credit checks in a short time can lower your score further. Instead, pre-check eligibility online, and compare rates carefully before committing loans. Even your credit score is weak, prepare for growing sales, recurring clients, stable cash flow, and bank statements for 3-6 months. This makes lenders focus on your business health only.
SMEBROTHER for your business loan solutions
Managing a loan business can be challenging if you don't understand the details. You can solve all your loan problems with SMEBROTHER. We help small and medium-sized enterprise customers win, and we promise: No success, no fee!
SMEBROTHER has an experienced team in Hong Kong with many years of experience assisting enterprises with financing, covering all banks in Hong Kong (CCB Asia, Bank of China – Hong Kong, Dah Sing Bank, DBS Bank, HSBC, Shanghai Commercial Bank, Citibank, CITIC Bank, and many more), plus customizing your exclusive financing plan. We will find solutions for your business with poor credit, getting the highest commercial loan amount matched with the lowest exclusive interest rate.
Over 200 SMEs have successfully obtained loans with us, through close collaboration with more than 10 banks in Hong Kong. If our success rate is up to 98%, you could be one of them. Contact us, and SMEBro will contact you as soon as possible!
