Small-business owners are the bread and butter of the American economy, but the responsibility doesn’t come easy. Bad credit business loans can help owners out of a jam when they need it most, kick-starting growth and getting finances back on track.
Lenders and credit reporting agencies define bad credit in different ways. A FICO score between 300 and 629 is typically considered bad credit for small businesses and can make life difficult for small-business owners. It’s even possible for a small-business owner to have a good personal credit score but a bad score or limited credit history for the company itself.
There are many reasons why a company or business owner has less-than-stellar credit, but the outcome is still the same: It’s harder to get approved for traditional small business funding. Fortunately, lenders like QuickBridge, can work with businesses to help them get back on track with a bad credit business loan.
Despite having poor credit history or recently establishing a new business, options remain available. The following are four ways business owners with bad credit can increase their chances of securing business financing:
1. Pledge a cash down payment
Businesses that have adequate cash flow despite poor credit may still qualify for a short-term business loan. Supplying a cash down payment to cover a percentage of the costs related to purchasing business equipment may help you secure business financing.
2. Provide collateral or 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.
3. Sign a Personal Guarantee
If your personal credit history is better than your business credit, you might consider applying for a business loan that weights 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.
4. 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. Your lender may be able to get you a smaller cash amount to start. Once you pay-off the smaller loan, you will be able to borrow a larger amount of funding.
Getting approved for a business loan can be especially tough for startups, since a large portion of credit scores are calculated based on how long a company has been in operation. However, even successful startups tend to have less than perfect credit. Fortunately, like more established businesses who could use a helping hand, there are still opportunities to acquire working capital to fuel growth. 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”.
Having bad credit or being a startup business, might feel as if your financing options are limited. But we believe small and locally owned businesses deserve a better deal. QuickBridge utilizes a number of strategies for bad credit business loans to help these companies get back on their feet and build on past success. To learn more about how to find a bad credit business loan that’s still easy to apply for and put to use, give us a call today.