A Line of Credit... Just in Case

COVID-19

Quick Line of Credit Quote

  • Thousands of organizations are already PRE-APPROVED!
    Are you?

Can I Get a Loan for My Business With Bad Credit

Many small business owners have wondered if it is possible to get a loan for their business with bad credit. If you are one of them, then you need answers and information you can trust.business loan

Getting bad credit is very easy, but getting out of it can take years. Nonetheless, while you are working to reestablish your good credit, life must go on. You still have to run your business and handle daily operating expenses. In this case, you may need to get a loan for your business, even with bad credit.

Are There Other Funding Options for a Business Owner With Bad Credit?

With traditional funding options, it is all about the credit score. There is not much leeway to explain why your business is a good investment or prove how you will be able to repay a loan should they decide to help you. Also, less weight is given to assets like account receivables for which the money will come in but you just have to wait 30, 60, or 90 days for them to become due.

Thankfully, there are alternative lenders available to provide emergency business loans to entrepreneurs with bad credit. For these options, always make sure you understand any fees and terms for repayment that might be involved.

There are traditional accounts receivable factoring companies, which will purchase your account receivables and grant you a loan relative to their value. However, you should expect very expensive fees and repayment schedules which can take up to two years to complete.

You can also turn to cash advance companies, like Financing Solutions (www.fundmypayroll.com). These companies will also give you money based on your account receivables but they are much quicker than any other type of institution. The application is fast and you can get the funding you need in less than two days. Best of all, instead of getting trapped in an endless cycle of borrowing and payments, with a cash advance, you can pay the money back in a few weeks or months.

It has been said that no man’s credit is as good as his cash. When you have cash on hand, you can take care of everyday expenses, such as making payroll and purchasing supplies. You can also begin to build a working capital nest egg, so that in the future, you will not have to rely so heavily on whether or not you can get a loan with bad credit.

Does Having Bad Credit Prevent You from Obtaining a Loan?

You may be pleased to learn that there are funding options for entrepreneurs with bad credit. These are usually programs designed to specifically help small business owners in the same situation. While you will be able to borrow money, the privilege could come at the cost of higher interest rates on the loan. This is the trade off for the lender taking a chance on you.

Another option you can strive for, if you own your home, is a home equity line of credit from a bank. Basically, this means that you put your home up for collateral in order to qualify for the loan. It is important to note that this could be risky, because if you have any difficulties making or keeping up with the payments, you may lose both your business and your home.

In addition, you could skip banks altogether and borrow money from someone you know. This could be a friend, relative, or business colleague. You may also try to locate private investors willing to loan funds based on the strength of your business plan and your current success. If you choose this route, make sure that all terms, conditions, and a fair repayment schedule is written and signed by all parties in advance of any money changing hands.

How Having Bad Credit Affects Your Business

Most likely, you would not accept business from customers with bad credit or a history of not paying their debts. For most people, having bad credit means that you may not be able to obtain or refinance a mortgage and you experience difficulty if you attempt to purchase a vehicle. However, when you own a business, your bad credit history can affect your entire organization.

As a small business owner, having bad credit could make it difficult to find vendors willing to work with you. It is also difficult to get loans, which in turn makes it harder to improve your credit score.

The best thing you can do for your business is to get off the bad credit merry-go-round altogether. A cash advance company could be the answer you have been seeking.

Related posts

What is Factoring?

In elementary school math, you learned all about factors, but you may not have...