What Are Bad Credit Business Loans?
Different agencies describe bad credit in different ways. Generally, having a FICO score of 300 to below 669 is defined as a bad credit score for small businesses. Another cause may be that even though a small-business owner has an excellent personal credit score; the company may have a limited credit history.
Unfortunately, due to these factors, it is more difficult for small businesses to get approved for traditional financing. On the bright side, many other lenders do offer approval for bad credit business loans to small businesses without all the headaches.
How to Get Approval for a Bad Credit Business Loan
Even if you have bad credit, it is still possible to get approval for a business loan. Here are some ways that small businesses can obtain the funds they need.
A Cash Down Payment
If your business has an adequate cash flow, you can still qualify for a bad credit business loan. One possibility is that you furnish a cash down payment. After making a cash down payment, lenders may be more likely to approve a bad credit business loan for you.
Provide Collateral or Assets
A second possibility is to use future debit or credit card sales and other assets as leverage to obtain a loan. This method is more concerned with your ability to pay back the loan and revenue than your credit score.
A Personal Guarantee
Do you have an excellent personal credit history? If the answer is yes, think about applying for a business loan that focuses more on your personal record. You can do this by signing a personal guarantee which highlights your personal ability to pay back the loan, as opposed to the ability of the business to pay back the loan.
Be Willing to Accept a Smaller Loan Amount
Accepting a smaller loan amount can also make the approval process more accessible. Some lenders may approve a bad credit business loan of smaller amount to begin with. After successfully paying off the smaller loan, the lender will be more likely to lend you more significant amounts in the future.
Can Startup Businesses Get Approval for Bad Credit Business Loans?
Startup businesses sometimes face additional challenges in getting approved for loans. But even for young companies, there are many opportunities to obtain a bad credit business loan. Different methods include: making a down payment, providing collateral, and signing a Personal Guarantee.
Getting Approval for Bad Credit Business Loans
Maybe you feel like you have limited options when your business is new or has a less than stellar credit history. But there are many options and strategies that can help you get your business back on track by obtaining a bad credit business loan. To learn more about qualifying for bad credit business loans and the credit application process, do not hesitate to contact Blursoft!
