If you have a poor credit score and are looking for options to finance your small business, you’ve come to the right place.
In this post, we’ll be going over ways those with bad credit can find loans for their business. We’ll touch on what factors are essential when it comes to scoring a loan, how much money you can expect to borrow with your credit score as it is, and offer some helpful advice on how best to proceed if no reputable banks will give you a loan because of your past mistakes.
You may have found that credit is a challenge for you. Perhaps you’ve had numerous late payments, been through an overwhelming number of credit cards with high-interest rates, or have even had to file for bankruptcy because of debt. In any case, your credit score is likely suffering as a direct result.
When it comes to small business loans, there are many factors that lenders consider before deciding on whom they’ll lend the money to and how much they’ll be able to offer them. You can still qualify for loans when you have a bad credit score. It just means that most of the work will fall on your shoulders to educate the lender about what happened in the past and why you can be trusted now.
So, how do you go about financing your small business? What extra advantages do you have when getting a loan with poor credit?
As much as it’s possible, try to keep personal and business finances distinct. Make sure that the assets of your business are protected. In addition, stay on top of your accounts payable. The last thing you want is a debt collector showing up at your door or past due accounts hurting your credit score even more.
Most banks will be willing to finance your small business. But, to get a loan, make sure you understand the limitations. Ask for a loan that is tailored to your specific needs. For instance, it might be very beneficial for you to receive assistance with equipment or hire new employees. You may need funds to replenish your current inventory levels.
Before the dust has even settled from last year’s financial crisis and the subsequent recession, many banks have been tightening their lending policies due to fear of another bank run happening again. In this case, they’re looking at each individual’s past credit history and borrowing history to judge if they’ll be able to trust them enough to invest in their future progress.