What if the cure for your bad credit was an option you never knew you had?
Many with poor credit think it is impossible to start the business of their dreams. But what if you could not only get a business loan but use it to improve your credit?
Business loans for poor credit are possibly your best choice. Here is our breakdown of everything you need to know.
The Better Alternative
As we said, most people consider their bad credit to be the kiss of death for their business loan application. And at most traditional lenders, that is exactly what a poor credit rating translates to.
However, you now have more lending options than ever before as both a consumer and a business. And many alternative lenders have more relaxed regulations when it comes to approving loans.
In some cases, a credit score that is too low for a traditional lender may be acceptable to an alternative lender. And in a few cases, you can find some alternative lenders that have no minimum credit score to borrow.
Beyond the credit scores, there may be other ways for you to obtain needed funding.
So, we have good news and bad news. The bad news is that almost any brand new business will have trouble getting a loan. This means you may need to operate in whatever capacity you can for a year or so before seeking funds.
The good news is that this gives you alternative ways to borrow money. For example, you may be able to leverage unpaid customer invoices into an approved loan. In the eyes of the lender, this is a safe bet because the invoices will soon be paid.
Getting Better All the Time
Chances are that you were trying to improve your personal credit before seeking a business loan. It is good to keep doing this even after being approved for the loan you need.
The nature of a business means that you will regularly need working capital over time. While your initial bad credit loan may have a high-interest rate, you can work to make sure that your future loans have better interest and better overall terms.
Smaller Loans, Easier Approval
Many traditional business loans are for $50,000 or more. This is why lenders hesitate to let those with poor credit borrow money.
If you need less money than that, you may have better odds of getting approved. Try to find alternative lenders that offer microloans in order to maximize your chances of approval.
One lending option you have likely overlooked is peer-to-peer. Why not crowdsource your funding needs and skip the major lenders altogether?
In this model, multiple investors may make up a single loan. This reduces the risk to their bottom line. At the same time, a handful of individuals may be likelier to approve your loan than a major financial institution would be.
Business Loans for Poor Credit: The Next Steps
Now you know how to get business loans for poor credit. But do you know where you can apply right now?
We work with businesses of all sizes to help entrepreneurs achieve their dreams. To see how we can finance your vision, apply for a loan today!