How to Get a Small Business Loan With a Bad Credit Score
Bad credit is like having a sore knee — it doesn’t bother you until you try to move. When you are trying to run and grow your business, a bad credit score can slow you down and prevent you from getting the financial tools you need, like a small business loan.
Does Anyone Offer Small Business Loans for Those with a Bad Credit Score?
A small business loan can help you build working capital or take advantage of opportunities to grow your business. It may be possible to get a business loan with a bad credit score, but you may need to jump through extra hoops that other small business owners don’t.
If you have a large amount of assets or collateral, this might make it easier to get a small business loan. Although they are asset based, if you manage the loan correctly, it could help improve your credit score for future lending needs. On the other hand, if you have all that, you may not need a loan in the first place.
Sometimes, you may have luck by shopping around, especially if your credit score varies with the different reporting agencies. You might be more successful if a lender considers your highest rating instead of the lowest one or an average of all three.
It may also be possible for you to get a small business loan if you find a co-signor with good credit. This could be a family member, friend or investor. However, if you choose this route you should be very careful to prevent doing damage to the co-signor’s credit score.
Before seeking a small business loan, it is crucial that you calculate how much interest you are able to pay and to have a solid plan for how you will repay the money. Otherwise, getting a small business loan will only put you deeper in debt.
Alternatives to a Small Business Loan for Entrepreneurs with Bad Credit
Of course, there are other sources for fast business funding, such as a cash advance company like Financing Solutions (www.fundmypayroll.com). As an alternative lender, a cash advance company is different than a traditional bank and offers more lenience to those with a bad credit score.
At Financing Solutions, they will look at your credit score but also take other factors into consideration, such as whether you are currently paying your bills on time to improve your credit score. If you have, then you are likely to be approved for fast business funding.
The process is quick and easy, with approval decisions made in less than 24 hours. With a cash advance company you can get the business financing you need in approximately two days.
Best of all, with a cash advance company, you will not be locked into a long term repayment schedule, which can tie up your money and prevent further growth. Most businesses that use a cash advance company are able to repay the money in just a few weeks or months.
How a Bad Credit Score Hurts Your Business
Today, it seems everything you want is based on your credit score. You already know that it is next to impossible to purchase a home or obtain a credit card if you have a bad credit score. Now, companies are using it as a justification to deny benefits in numerous areas, such as car insurance, employment opportunities and rental properties.
In business, having a bad credit score may make it difficult to find vendors willing to work with you. Additionally, you could be required to pay extra fees or interest rates in return for the company taking the risk of extending credit to you.
It is important to note that many lenders look at both your personal credit score and the credit rating of your business. Basically, you have to realize that lenders use your credit score to determine your likelihood for repaying the loan. A bad credit score shows that you may have had some difficulty with this issue so that will make it difficult for you to conduct any kind of transaction where credit or a certain level of trust is involved.
If you have a bad credit score, your smartest option is a cash advance company. They will work with you to get the fast business funding you need.