Business Loans with Bad Credit
You may be happy to know that you can apply for a loan despite a poor credit report. The key is to know where to find the right lenders to apply with.
There are various ways to take out a loan when you do not have a good credit record. Here are five steps to help guide as you prepare to apply for a business loan with bad credit.
1) Analyze your credit report
Before you apply for a small business loan make sure you check your credit report properly. Many people do not check their credit score when they plan to apply for a loan. You need to approach financial institutions in order to check whether they can assist you in order to get a business loan with your poor credit.
2) Ask for help from your relatives and friends
You can either borrow money from them or you can ask close relatives with good credit to cosign on your behalf.
This is a viable way to get a small business loan despite having poor credit. However, if you default on payment, then your cosigner’s credit report may be blemished.
3) Apply for a secured business loan
With a blemished credit report you can always apply for a secured business loan as an alternative. Keep in mind that you will need to provide collateral if you decide to go this route.
However, if you default on your payment, then the property used as collateral can be repossessed by creditors. The interest on this loan is comparatively lower than an unsecured loan since you’re using collateral against the loan.
4) Reestablish your personal credit
Before you apply for a business loan it is best to first re establish your personal credit. With poor credit, lenders consider you a high risk borrower so be prepared to either pay a high interest rate or receive a possible credit denial.
5) Obtain a small business cash advance
With a small business cash advance you can borrow much higher amounts compared to a personal cash advance. The lenders may not check your credit record when you apply for this type of loan.
Make sure you have a stable flow of income and a proper business plan prior to applying. With a good business plan you can generate more revenue by employing the plan which will enable you to pay off the loan on or ahead of the agreed upon terms.
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About guest author
Billy Patterson is associated with Oak View Law Group as a contributory financial writer. He likes to keep updating himself regarding recent developments in the finance sector. He has written many articles on debt management, small business, and bankruptcy.