Business Loans For Bad Credit Business Owners

business loans for bad credit

More to Consider

Lots of business owners, especially those who might be in the start up phase of their first business or new to procuring a business loan, might think that bad credit automatically means that you will not get a loan. However, this is not always the case, especially if you are not willing to give up, do your homework and weigh your options carefully. You can find ways to finance you business with business loans for bad credit.

In addition, most lenders need to see proof that you have been in business from two to five years before they will even consider giving you a loan. This can make it incredibly hard for startups to get the funding they need to secure a good start in their chosen area of business.

The majority of all lenders generally consider credit scores under 660 to be bad credit. It might be that you have mismanaged funds in the past or went through a rough time that was completely out of your control, such as the financial crisis we went through just a few years ago. Unfortunately, not a lot of lenders get past the score itself to understand why. In most cases, the creditor sees you as “high risk”, meaning that you are probably more likely to miss a payment, send in late payments or default on the loan.

But, the news isn’t all bad. There are many ways to get business loans for bad credit business owners with less than perfect credit to obtain a business loan. It might seem impossible at first, but there are, in fact, more things to consider than just your credit score.

Alternate Lending

Big name banks are generally much harder to secure a loan through, especially if your credit is less than perfect. They have very high standards, so as not to accrue any more risk than they absolutely have to, and are less likely to look past credit mishaps. They set these standards in place and rarely deviate from them, no matter what the individual circumstance of the borrower is.

Alternate lenders, on the other hand, know that sometimes bad things happen to good people. They take into consideration a lot more things than traditional lenders do and because of that, they are better able to take those risks that banks are not. By taking a closer look at your businesses strengths, operating history, bank deposits, credit card customer history and more, they can overlook things that other lenders cannot or will not.

Work with You

First Capital Business Finance, for example, has an Asset-Based Direct Lease Program, where bad credit, bankruptcies, tax liens and even repossessions do not automatically mean that they will deny a loan to you. We are even willing to work with you, even if you have only opened your business doors as recently as the day before. This program also does not require you to prove years of income, as you will only need three months of proof, and sometimes no proof of income is needed. With this program, an extra three months of income beyond that will get you even more capital.

Assets come in other forms too, and First Capital understands this as well. A large security deposit or down payment can mean as much as having extra physical collateral to use as an advantage for funding. When you put up a lot for collateral or make a large deposit, it is probably a safe bet that, having put so much of yourself into acquiring the loan, you are less likely to default and lose that.

Making It Easier to Find Funding…

There are other things as well that can positively influence your ability to get a loan, even if your credit is less than perfect. In the program mentioned above, offered by First Capital, assets are the primary area of focus. Having assets mean that you have extra collateral to stand as insurance in addition to the new equipment you are acquiring. You can use heavy equipment, commercial trucks, manufacturing equipment and more, all of which will all increase your chances of getting the funding that you need.

A substantial deposit or down payment is another form of an asset that you can use to show a lender that you are serious about obtaining and paying back a loan. The more assets you have, the less likely you are to default on your loan and the less of a risk you become to the lender. They know that if you put a large amount of your own money down, you are less likely to risk losing it.

Co-Signing

Having a co-signer to sign along side you for a loan increases the lender’s insurance that you will not default in making payments. In essence, by signing, they are stating that they will fulfill the payments for the loan should you not be able to do so. However, the lender is not the only one who can benefit from a co-signer. Having a co-signer means that you are more likely to get a better interest rate than you would if you were the sole applicant, which means that you will wind up paying less overall.

The ability to process and accept credit and debit cards can also affect your ability to get a loan. A business cash advance also known as “merchant cash advance” program can be utilized in situations where your business does a viable amount of sales in credit, but should only be taken advantage of once you have explored all your options.

Some Closing Thoughts

It is important to keep in mind that in most instances, if you are a business owner with bad credit, you are going to be paying a higher interest rate than those with good credit. This is another way lenders get around some of the risk involved with bad credit, but it can also be a good way for you to build your credit back up. It can actually be worth it then, to take the loan, even with a higher percentage rate.

Access to Business Loans for Bad Credit Owners

With all loans, however, there are scammers out there that will surely try to take advantage. Make sure to keep your eyes open for any deal that seems “too good to be true” because they usually are. Some companies charge upfront fees, even knowing the customer might not even qualify. Know what all your options are before closing the deal. If you need business loans for bad credit business owners, use First Capital to give you the business loans you need for your business. Call us at 888-565-6692 and one of our advisers would be pleased to assist you. Or, apply online and prequalify for your loan.

Business Loans For Bad Credit Business Owners | First Capital Business Finance



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