If you have bad credit, small business loans can be hard to come by. Few companies want to loan money to a business when they don't feel confident that they'll get their money back. Business owners without good credit need to research bad credit business loans.
It's important to note that a bad credit score is not always a result of being irresponsible in paying back loans. You may need a business loan for bad credit due to lack of credit history.
If you are applying for poor credit business loans, be prepared for:
1. A longer search. With good credit, you can walk into most any bank and get a loan. Getting a business loan with bad credit can be a bit more difficult. You may have to speak with many lenders before you find one willing to take a chance on you.
2. Less money. When applying for a business loan, bad credit can affect how much money a lender will offer you. It may not be as much as you'd hoped for.
3. Higher interest rates. To compensate for the risks they take on when giving bad credit business loans, interest rates are higher.
Action Steps
The best contacts and resources to help you get it done
Look for a company that specializes in business loans for bad credit
If traditional banks turn you down because of your bad credit, it's time to look for a company that deals with businesses that have bad credit. In many cases, you can apply online and have the money in just a few days.
I recommend: The
Access Capital Group offers unsecured lines of credit for businesses that do not have good credit. The
Opportunity Fund is a non-profit organization that helps businesses with bad credit get the money they need to fund their business.
Get a merchant cash advance as a bad credit business loan alternative
Rather than a loan, a merchant cash advance can get you the money that you need. They will automatically collect money from future credit purchases.
I recommend: FastUpFront specializes in offering small businesses cash advances. They will let you know if they can approve you within 24-hours.
Merchant Resources International offers a similar service. You should note that you can only apply for these types of services if your business currently accepts credit cards.
Consider peer to peer funding for bad credit business loans
When it comes to business loans, bad personal credit can get in the way. Sometimes, all you need is a sympathetic ear and an open mind to get the money you need.
I recommend: With peer to peer lending through sites such as
Prosper and
Lending Club, lenders are individuals who like to help people out while still making a return on their money. Banks will look mostly at your credit score and collateral to determine if you are loan-worthy, but a peer to peer lender will look at you.
Tips & Tactics
Helpful advice for making the most of this Guide
- Once you are able to get business loans with bad credit, make sure that you pay them back on time. This will improve your credit score and you will be able to get a better deal next time.
The official source of Bad Credit Business Loans is
the Bad Credit Business Loans page at Business.com
Related Resources from Business.com
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