How to Get a Small Business Loan with Bad Credit

Starting small business most people find it difficult especially if they don’t have enough funds to cover all possible arising aspects.

Moreover, it is also challenging to do if you decided to take a small loan but have got bad credit history. Surely, nowadays there are tough times for beginner entrepreneurs; however, economic and financial problems should stand in the way of setting up a profitable business.

So here an important question arises: how to get a small business loan with bad credit?

Ways to Get Small Business Loans with Bad Credit Score

Small Business Loan with Bad CreditEven if everything seems to be OK with your business now, you may need some additional capital during the first several years. Before starting you have to follow several simple steps:

Step #1. Size up your needs and decide whether you really need additional funding.

In case of having bad credit history it might be tougher to repay the loan due to high interest rates.

Step #2. If you need less than $35,000, there is an opportunity to apply for SBA 7(a) loan which has several variations. But before applying you need to talk it over with the lender to make sure there are good odds for you to apply successfully.

Step #3. Look for collateral to secure the loan you are going to take.

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See, also: SunTrust Personal Loans for Bad Credit

Besides the above mentioned tips there are also several ways how to get a small business loan with bad credit:

  • Credit partner. You can find a business partner who will be able to provide you with the needed funds in the form of business credit cards. When opting for this variant you will need to look for a credit partner who has perfect credit history, though as an option you can find someone to invest in your small business and participate in it. However. It may turn out to be risky for your credit partner.
  • Bank deposit. There are revenue-based loans that are based on the deposits transferred to the bank account monthly. It is a good way out for those who have bad credit history. Another advantage of choosing a bank deposit option is the time it gets to receive funds – about 7 business days.
  • Merchant cash advance, or credit card sales. This funding type provides a borrower with fast cash in exchange for future credit card sales. It is a perfect option for those who have bad credit history but are willing to set up a small business. Though everyone has to be very careful about the provider of the merchant cash advance he/she selects.

Tips to Improve Credit Score to Get a Small Business Loan

Though having bad credit history isn’t the end of the world, it is important to do everything to improve it.

See, also:

Bank of America Personal Loans for Bad Credit

Chase Small Business Loans

Citibank Small Business Loans

HSBC Business Checking

The following tips should be taken into account:

– Try to refuse from credit cards or at least be cautious when using them.

– Pay all your bills strictly on time and sometimes it is advisable to even pre-pay them.

– Make your business fraud-free and profitable. Run your company wisely and choose only professional and experienced staff.

– Also it is advisable to make your business seem serious by incorporating it.

  1. Alan says

    Setting up a business isn’t a piece of cake and everyone who’s been there knows it for sure. I was among those who faced financial difficulties in the first year of my entrepreneurship. Among the solutions I saw the only one – applying for a small business loan with bad credit to keep my company going and never regretted it. Surely as with any other type of loan it was quite difficult at first with all those fees and rates, but when there is nothing else to opt for, getting a business loan is a reasonable solution.

  2. John B says

    Wow, one should be quite risky to own both a small business and bad credit as it is like a big rock that takes you deeper down. Surely any businessman should think of his/her credit history and in any case do everything possible not to make everything worse. However, it’s always possible to get a small business loan with bad credit but pay careful attention to rates.

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