Getting small business loans with bad credit can be a hurdle, but it is not insurmountable. With a little creative thinking you can find ways to open credit doors, even when yours is less than stellar.
Cleaning up your debts is the obvious start, but that does not erase the past. In order to make lender’s forget the past and focus on your small business’ future you have to focus on the following:
Get a Partner
Your credit might be bad, but your business idea isn’t. Talk up your idea to partner prospects until you find the one who believes in you. Than you and your incredible new business venture can ride his or her good credit coat tails straight to the bank.
Partnering up with the right person means you are going to have to sell them on your idea. To really pack your pitch with punch, you are going to have to not only present your small business idea, you will have to sell your self and the passion you have for it.
Banks are not the only option in securing small business loans with bad credit. Consider hitting up a good friend or a family member if they have the means to help you out. You could even have them become a silent partner in the small business and take out a loan on your behalf. Just ensure that you lay out the terms and stick with them to avoid ruining a good relationship. If you are unable to find the friend willing to take out a loan for you, or lend you the money, they may be willing to co-sign a loan that is in your name.
If borrowing money from friend does not appeal to you, consider a secured personal loan as opposed to a business loan. A small business loan with bad credit may not be feasible, but if you have equity in your home or another asset that can be used as collateral, you could secure the money with a personal loan even if you have a bad credit rating.
Get on Facebook
Banks have become increasingly interested in probing deeper into applicant’s personal worlds before extending any credit offers. Clean up your Facebook and other social media sites to reflect a mature individual with good business sense. You may even go so far as to start a page for your small business idea in order for the bank to see just how serious you are.
This will work at improving your chances of getting small business loans with bad credit only if you also show an improvement in your recent credit history. Close as many credit accounts as possible and always maintain a positive balance in your accounts.
Get Alternative Small Business Loans With Bad Credit
Alternative lending companies have become increasingly popular over the last decade, especially for individuals who are attempting to get a small business loan with bad credit. Micro-financing is one type of alternate lender worth looking into. They specialize in loans for start up business’ and use different methods than the banks in determining credit worthiness.
Alternate credit scoring looks at your more recent credit history, including regular monthly expenses. They will ask about your housing payments, utility bills and even your cell phone service. If you have been working towards building a more desirable credit profile, this will work to your advantage with alternative lenders who are not interested in ancient credit history.
If you have a viable small business idea, it is up to you to run with it. Don’t allow big banks to dictate how big you can dream. Be creative in finding ways around their strict standards and you will get the financing you need to bring your small business idea to fruition.