Get a Commercial Mortgage with Bad Credit?
13th February 2026
By Simon Carr
Yes, it is often possible to get a commercial mortgage with bad credit, though it may be more challenging and the terms might be less favourable. Specialist lenders are more likely to consider your application than high street banks, but you will probably need a larger deposit and may face higher interest rates. The key is to present a strong business case and demonstrate the affordability of the loan.
Securing finance is a critical step for any business looking to purchase or remortgage a commercial property. If you or your business have a history of credit problems, you might worry that this automatically puts a commercial mortgage out of reach. While a poor credit history does make the process more difficult, it doesn’t always mean a refusal.
This guide explains how lenders view bad credit, what you can do to strengthen your application, and what your options are. Finding a commercial mortgage with adverse credit is about understanding the lender’s perspective and preparing thoroughly.
What Does ‘Bad Credit’ Mean for a Commercial Mortgage?
When lenders refer to “bad credit” or “adverse credit,” they aren’t just looking at a single credit score. They are assessing your full credit history for specific events that signal financial risk. For a commercial mortgage application, this can include issues on both your personal credit file and your business’s credit file.
Common examples include:
Late Payments: A history of missed or late payments on other credit agreements, such as loans, credit cards, or supplier invoices.
The severity, date, and reason for these issues all play a part. A single missed payment several years ago will be viewed very differently from a recent bankruptcy.
How Lenders Assess Applications with Poor Credit
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Unlike personal mortgages, which are often decided by automated scoring systems, commercial mortgage applications are typically assessed by an underwriter on a case-by-case basis. This can work in your favour if you have bad credit, as it allows a person to look beyond the numbers and understand the context.
Here are the key factors a lender will consider:
The Size of Your Deposit
A larger deposit is the single most effective way to improve your chances. A substantial deposit lowers the lender’s risk by reducing the Loan-to-Value (LTV) ratio. While a typical commercial mortgage might require a 25% deposit, an applicant with adverse credit may be asked for 30%, 40%, or even more. This demonstrates your commitment and reduces the lender’s potential loss if the loan fails.
The Strength of Your Business
Lenders need to be confident that your business can comfortably afford the mortgage repayments. They will scrutinise your:
- Profitability: Evidence of consistent profits is essential. You will need to provide certified accounts for the last two to three years.
- Business Plan: A detailed, professional business plan with realistic financial projections can help convince the lender of your future viability.
- Experience: Your personal track record and experience in the industry can build a lender’s confidence in your ability to run the business successfully.
The Nature of the Property
The property itself acts as the security for the loan. A standard commercial property in a good location (like an office or retail unit with a reliable tenant) is considered a lower risk than a more unusual property (like a nightclub or a specialised industrial unit).
Finding the Right Lender: High Street vs. Specialist
If you have a history of bad credit, your choice of lender is crucial. The market is generally split into two types of institutions.
High Street Banks: Major high street banks tend to have very strict lending criteria. Their decisions are often guided by automated credit scoring, meaning an application with even minor credit issues could be declined automatically. They are generally less equipped to handle complex or adverse credit scenarios.
Specialist Lenders: These lenders exist to serve borrowers who do not fit the rigid criteria of the high street. They take a more manual and holistic approach to underwriting, looking at the entire application to understand the story behind any credit problems. If your business is profitable and the deal is strong, many specialist lenders will consider providing a commercial mortgage despite past issues. However, this flexibility often comes at a cost in the form of higher interest rates and fees to offset their increased risk.
Steps to Improve Your Chances of Approval
If you’re looking to get a commercial mortgage with bad credit, preparation is everything. Taking these steps can significantly strengthen your application:
- Check Your Credit Reports: Before you apply, it’s wise to review your credit file to understand what lenders will see. Check for any errors or outdated information that could be unfairly affecting your profile. Get your free credit search here. It’s free for 30 days and costs £14.99 per month thereafter if you don’t cancel it. You can cancel at anytime. (Ad)
- Prepare a Solid Business Case: Compile a comprehensive business plan that includes your trading history, financial accounts, cash flow forecasts, and an explanation of how the property will contribute to your business’s success.
- Be Honest About Credit Issues: Attempting to hide credit problems is a red flag for lenders. Be upfront and provide a brief, factual explanation for what happened and what steps you have taken to resolve the situation since.
- Work with a Specialist Broker: A commercial mortgage broker who specialises in adverse credit has expert knowledge of the market. They know which lenders are most likely to approve your application and can help you package it in the most positive way.
Are There Alternative Finance Options?
If a commercial mortgage is not immediately available, a bridging loan could be a viable short-term alternative. Bridging loans are a type of secured finance used to ‘bridge’ a temporary funding gap.
Lenders for bridging finance are often more interested in the value of the property and your exit strategy (how you will repay the loan) than your credit history. This can make them more accessible for applicants with poor credit.
It’s important to have a solid exit plan, as bridging finance is a short-term solution. Your property may be at risk if repayments are not made. Failing to repay a bridging loan on time can lead to serious consequences, including legal action, repossession of the property, penalty interest rates, and additional charges.
Final Thoughts
While getting a commercial mortgage with bad credit presents hurdles, it is certainly not impossible. Success depends on finding the right specialist lender and presenting a compelling case that focuses on the strength of your business and the quality of the property. A larger deposit, a robust business plan, and professional guidance can make all the difference.
For more impartial information on business borrowing, you can find useful guidance on business borrowing from MoneyHelper.