Quick answer
You can often get a business loan after a default, depending on how old it is, whether it has been paid, how large it was and what your business bank account shows now. Paid and older defaults with clean recent banking are commonly accepted by specialist lenders. Recent or unpaid defaults usually need property security or a smaller, simpler request.
Key points
- Age, size and status of the default matter most
- Paying a default before applying usually helps
- Clean recent banking can outweigh an old default
- Property security helps with recent or larger defaults
A default is not the end of the story
A default is listed when a debt of a minimum size goes unpaid for a set period after the credit provider gives notice. For an automated lending system, a default is often a hard stop. For a person, it is a question: what happened, and what has happened since?
Many business owners carry a default from a phone contract, a utility account or a previous business that did not survive. Years later the business they run now is healthy, yet the old listing keeps triggering automatic declines.
How lenders weigh a default
| Factor | Easier | Harder |
|---|---|---|
| Age | Several years old | Within the last year |
| Status | Paid or settled | Unpaid |
| Size | Small, such as a utility | Large, such as a business loan |
| Number | One | Several |
| Explanation | Clear and documented | None given |
| Recent banking | Steady and clean | Overdrawn, dishonours |
Practical steps before you apply
- Get your credit reports from the credit reporting bodies and check every listing. If something is wrong, see credit file errors.
- Pay what you can. Settling a small default before applying often makes a noticeable difference.
- Write a two-line explanation. What happened, and why it will not happen again.
- Keep the business account clean for a few months: no dishonours, no overdrawn days.
Routes that tend to work
Specialist unsecured lenders consider defaults when bank statements are healthy. See bad credit business loans. Where the default is recent, large or one of several, a property-secured loan from as little as $20,000 up to $5,000,000 lets the equity carry the decision, with no valuation needed before approval. A guarantor with a clean file can also strengthen an application.
An illustrative example
A builder had a default from a supplier account when a developer client went under owing him money. The default was paid two years later. His business is now busy and his statements are strong. A bank declined automatically, but a specialist unsecured lender, given the explanation and proof of payment, approved working capital to fund materials for a new project.
What not to do
Do not apply to several lenders at once hoping one will overlook the default. Each application can add an enquiry, and a cluster of them makes things harder.
The fastest honest route
Submit a short enquiry and tell us about the default: when, how much and whether it is paid. Asking needs no credit check, a specialist calls you back, and nothing gets shared. Ask what is possible.
Frequently asked questions
How long does a default stay on my credit file?
Defaults generally remain on consumer credit reports for several years, even after they are paid, though the file is updated to show the payment. Check your own report for the exact listing dates.
Should I pay a default before applying?
Usually, yes, if you can. A paid default reads far better than an unpaid one and shows the issue is resolved.
Can a default be removed?
Only if it was listed incorrectly. If you believe a listing is wrong, you can ask the credit provider or credit reporting body to correct it.
Does a default on my personal file affect my company?
Yes. Directors usually guarantee company loans, so lenders check directors' personal files.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a person who handles unusual deals calls you back.