Entrepreneurship is risky, and all ventures require some form of capital investment. In the earliest stages of business, owners may tap into their credit and savings to give their businesses a headstart. These and other factors can severely impact your personal and business credit. Even so, there are lenders who are willing to take a chance on riskier businesses and lenders. The trick is knowing how to get a business loan with bad credit.
How To Get a Bad Credit Business Loan With a Business Plan
Many entrepreneurs launch their businesses without ever creating a formal business plan. Sometimes, this works for them. However, if you plan to seek venture capital or a business loan, you need a business plan. How detailed you need to make it depends on the entity you’re pitching, but at least get the bones of the plan underway, including:- Financial documents showing current performance
- Financial projections of cash flow and business operations
- Profiles on existing core members or workers
- Marketing and public relations plans
Why You Should Check Your Credit Score for Your Bad Credit Business Loan
Experian recommends checking your personal credit score before moving forward with bad credit business loans. Your credit score may not be as bad as you think it is, or you may not need to put in a lot of work to fix it. There are dozens of good apps on the market that can provide tips to help you improve your credit score in a few months. Common recommendations include the following:- Dispute inaccuracies in your credit score or credit history.
- Catch up on payments for any delinquent accounts.
- Pay down debt to reduce credit utilization.
- Ask for credit increases wherever possible.
How Research Can Help You Get a Business Loan With Bad Credit
You can never know for sure what your options are before doing thorough research. Even if you have a good offer already on the table, shop around. If you have a formal offer from another lender, you might use it to get better offers from competitors. It’s important to note that “better” depends on your specific business needs. You are unlikely to get both a long pay-off term and a low rate, so decide ahead of time which option is more important to you. These are some of the many bad credit loans you may find available:- Invoice factoring
- Equipment financing
- Invoice financing
- Merchant cash advance
- Microloans
- Commercial lines of credit