As a startup venture or budding small business, seeking funding at some point is expected.
Some business owners don’t lose sleep over getting a business loan, but it’s a different story for those with little or bad credit.
Old, minimal, or bad credit shouldn’t prevent you from getting the business loan you need.
Here’s how to get a small business loan with little or bad credit.
How to Get Approved for a Business Loan with Bad Credit
To improve your chances of getting a small loan with old, little, or poor credit, keep the following tips and tricks in mind.
1. Know Your Credit Score
In the world of business, credit scores are a top player. They affect everything such as interest rates, getting approved for a rental, a new credit card, or a loan. Before applying for any loans, you may want to pull your credit report to get a more accurate view of your current credit standing.
2. Sign with a Co-Owner or business partner
The best way to have an opportune chance of being approved for a small business loan is to make certain all co-owners are on the application. The co-owner helps with the approval process from a credit standpoint, even if they are not the majority business owner.
3. Offer Collateral
Some types of business loans are available without collateral. However, if you have really poor or nonexistent credit, a quick route to loan approval is offering up collateral. Avoid putting any personal assets (like your family home) on the line. Equipment loans are a smart alternative to traditional collateralized loans, considering the equipment you get will be used as the collateral.
4. Apply for Small Loan Amounts
One pro tip for how to get a loan with bad credit is applying for small amounts of funding. Also, the amount of money you ask for needs to be directly connected to your business plan. So, if your business plan only calls for $5k worth of resources, don’t seek a $20k loan. Showing lenders that you’ve thought out your numbers will make them more likely to approve you with bad credit.
5. Research & Plan
The best way to get a loan fast is to do your research and plan ahead of time. Since every financing option has a different set of requirements, you’ll need to independently review each one. Save yourself the time and apply for business loans with less harsh credit requirements. Don’t wait to get funding last minute. You want to forecast when a business loan will be needed and prepare ahead of time.
What Business Loans are Available for Bad Credit?
Contrary to popular belief, there are quite a few small business loan options for individuals with bad credit. Try researching the following financing options to kick off your lender search.
- Microloans
- Merchant Cash Advances
- Lines of Credit
- Invoice Financing
- Equipment Financing
- Short-Term Loans
Keep in mind that each loan option is different and paired with varying rates of approval. Merchant cash advances come in with the highest approval rate (85%). However, we still encourage small business owners to look at all of their options and not stop at MCAs.
Bad Credit? No Worries with Online Lenders
The great thing about working with online lenders is their minimal business loan requirements. Online lenders are easier to work with and offer flexible financing options. Merchant Funding Solutions doesn’t judge too harshly if you have little or poor credit. You might be surprised at the quote you get.
