Bad Credit Business Loans

Here are 5 Ways to Get a Business Loan if You Have Poor Credit

Despite having poor credit history or recently establishing a new business, options remain available. The following are five ways business owners with less than stellar credit can increase their chances of securing bad credit business loans:

1. Pledge a cash down payment

Businesses that have adequate cash flow despite poor credit are in a great position to qualify for bad credit business loans. For example, you can supply a cash down payment to cover a percentage of the costs related to purchasing business equipment. The additional cash can help you secure the financing you need.

2. Provide collateral

Leveraging collateral improves your chances of getting approved. By securing a loan with business or personal assets, you give the lender the right to seize collateral to recover their losses if you are unable to repay the loan. Business owners typically use equipment or business assets to secure a loan.

3. Leverage existing assets

It’s also possible to leverage unpaid customer invoices, future credit or debit card transactions and other assets to secure a cash advance loan or a short-term loan, even with bad credit. The focus is more on your revenue and ability to pay back the loan, rather than your past credit history.

4. Sign a Personal Guarantee

If your personal credit history is better than your business credit, you might consider applying for a business loan that weighs more heavily on your personal credit. Signing a Personal Guarantee within a loan contract focuses more on your personal ability to pay back the loan, rather than the ability of the business.

5. Accept a smaller loan amount

If you are flexible in the amount you are trying to secure, then taking a lesser amount of money than what you originally planned for could be an option. A lender that offers bad credit business loans may be able to get you a smaller cash amount to start. Once you pay-off the smaller loan, you may be able to borrow a larger amount of funding. Paying off a loan is a good way to help improve your credit.

Know the requirements for various lenders and if your business meets them. For example, knowing your personal and business credit score, annual revenue, and available assets is a great way to compare requirements between traditional and alternative lenders.

Bad Credit Business Loans for Startup Companies

Getting approved for a traditional business loan can be especially tough for startups with their lack of established business credit. How long a business has been established is often a large factor in calculating credit score, and a minimum time in business is also often an eligibility requirement for business loans. Fortunately, there are still opportunities to acquire bad credit business loans regardless of your company's age. Using strategies such as placing a down payment, providing collateral, and signing a Personal Guarantee within a contract will help businesses that are still considered “new”.

Business Loans for Bad Credit Resources

Explore additional resources to learn how to improve your credit and increase your approval odds with articles from QuickBridge.

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