Tradies don’t usually end up with bad credit because they’re careless. It happens because a builder didn’t pay, a job went sideways, or the paperwork fell behind while you were flat out on site. Banks don’t care about the story. Bad credit loans for tradies are for business owners who need money now and have equity to back it up.
What does bad credit usually look like for a tradie?
It tends to be one or more of these:
- A default from an old supplier account or utility bill that got missed during a busy stretch
- Late payments on a car loan, equipment loan or credit card
- An ATO debt or a BAS that went overdue
- A court judgment from a dispute with a supplier or client
- Too many credit enquiries from applying to several lenders at once
- A past business that closed owing money
None of these automatically rule you out. What matters more is what’s happened since, and what security you can offer.
Why property equity matters more than your credit score
Banks score you. If the number is too low, the computer says no, regardless of the fact you’ve got a house with plenty of equity and three months of work booked in.
Our private lending partners work differently. For a property secured loan, they look at:
- The security. Equity in a home, investment property, commercial property or land that you or a guarantor already own.
- The purpose. What the money is for, and that it’s for business purposes.
- The exit. How you’ll repay, whether that’s a claim coming in, a sale, a refinance or cash flow.
Your credit history is part of the picture, but it isn’t the whole picture. No financials or cash flow records are needed, which helps if your books are behind too. A fast second mortgage is the most common way to do it, because it leaves your existing home loan where it is.
What if you don’t own property?
We’ll be straight with you. Unsecured cash flow loans are available for businesses with an ABN trading 6 months or more, but they rely much more on your credit file and bank statements. A recent default or a messy account history makes approval harder. If a family member is willing to offer their property as security as a guarantor, that can open up the property secured options. Get independent advice before anyone guarantees a loan.
Tell the story up front
The fastest way to get a no is to hide something that turns up on the credit check. The fastest way to get a yes is to explain it early.
When our lending specialist calls back, be ready to cover:
- What went wrong and when
- Whether the debt has been paid, is on a payment plan or is still outstanding
- What’s different now: new clients, better systems, a bookkeeper
- What the loan is for and how it helps
A short, honest explanation goes a long way with a private lender. If the bank has already knocked you back, our guide on what to do when the bank said no to construction finance is worth a read.
Example: a roofer with an old default
Hypothetical example only.
A roofer in Perth has a default on his file from a supplier account that went unpaid when a builder he worked for collapsed a few years ago. He also has a BAS debt building up. His bank declined a small business loan.
He owns his home with good equity. He takes a second mortgage over the home to pay out the old supplier debt, clear the BAS debt and restock materials for a new commercial roofing contract. The loan runs for 12 months, and he plans to refinance with a mainstream lender once his file has had time to recover and his tax returns are up to date.
Using the loan to fix the underlying problem
A bad credit loan is a chance to stop the slide, not just a quick fix. Tradies often use it to:
- Pay out defaults and overdue accounts
- Clear an ATO debt before it escalates
- Roll several expensive debts into one through debt consolidation
- Get bookkeeping and BAS up to date
Then, with the file cleaner and some clean months behind you, you’re in a better spot to refinance to a longer term lender.
Key facts: bad credit loans for tradies
- Loan size: $20,000 to $5 million
- Security: Existing property equity (home, investment property, commercial property or land)
- Credit: Defaults, late payments, judgments and ATO debts considered
- Speed: As little as 24 hours in some cases; typically a few days once valuation and documents are in
- Term: Typically 1 to 12 months
- Financials: Not needed for property secured loans
Mistakes that make bad credit worse
- Applying everywhere. Every formal application can leave a mark. Enquiring with us won’t affect your credit score.
- Borrowing without a plan. A short term loan needs a clear exit.
- Ignoring the ATO. Tax debts don’t go away, and they can get harder to deal with.
- Hiding the details. Surprises kill deals. Honesty speeds them up.
Find out where you stand
A rough credit file doesn’t mean the door is shut. Check your options in about 60 seconds, and a lending specialist will call back to talk it through. We’ll tell you quickly if we can help, and every loan is priced on your circumstances, with the sharpest rate available for your situation. You can also read how a private lender for builders assesses a deal.
