Low Fico Score

Low FICO? Business Loans For Bad Credit

Business Loans for Bad Credit

According to Forbes.com, a whopping 8 out of 10 businesses fail within the first year and a half. Why is this number so high? There are a variety of factors that may contribute to the failure of a small business, but one of the biggest factors is funding – without capital, a small business cannot grow, and without growth, the business cannot survive. Unfortunately, many small businesses struggle to get the small business funding they need due to poor credit.

Business Loan Options for Bad Credit

Securing business loans for bad credit can be a challenge, but it is not impossible – there are several options worth trying. One option you may want to look into is Small Business Administration (SBA) loans. These loans are government-guaranteed, so it is more likely that lenders will accept a business with less than stellar credit – you also have the option to select a particular lender that suits your situation. Before you apply, research the particular lender you will be contacting and plan your presentation carefully to show your business in the best light possible.

Another option is a business cash advance – this option is best if you only need a few thousand dollars. This type of loan is based on your monthly income so, if you can prove a monthly income of $2,500 or more, you may be able to get a cash advance of as much as $10,000. A third option is to obtain a microloan from an independent lender. Lenders for microloans are typically more lenient in terms of credit, which makes this option popular among small businesses with bad credit.

Tips for Improving Your Success Rate

Even if you have excellent credit, there is still a chance that your request for a loan will be denied. In order to improve your chances of succeeding in securing business loans for bad credit, you may need to take some extra measures. Follow the tips below to increase your chances of being approved for a loan:

  • Understand your financial needs – One of the main reasons business loans are denied is because the state of their credit doesn’t merit the amount of money requested. Know how much capital you actually need and be able to explain what you will use the money for.
  • See if you can get away with less – After determining how much money you need in a business loan, go back and redo the calculations to see if you can get away with less. The higher the loan you are requesting, the more difficult it will be to secure it.
  • Be willing to offer collateral – If a lender is uncertain about approving your loan, offering collateral in the form of property, equipment, or other assets may make the situation more favorable.
  • Don’t be discouraged by failure – It may take you more than one try to secure business loans for bad credit, so be prepared to try multiple options. Learn from each experience and use what you learned to make your next presentation stronger.If you are willing to do the work and the research, there is no reason why you cannot obtain a small business loans for bad credit. You simply need to know what your options are and then make your best case to secure the loan.