Bad Credit Business Loans: The Best Options for 2019
Biz2Credit's Platform Makes Financing Available for Small Businesses
How do you get a business loan if you have bad credit?
Securing a business loan with poor personal credit or low FICO score can make getting a business loan more difficult. In any case, it almost always raises the cost of borrowing through higher interest rates, higher fees or both. However, having poor credit does not mean you can't get a loan.
Getting a business loan with bad credit in 2019.
There was a time when bad personal credit would exclude a business owner from securing a business loan. With many alternatives to traditional banks, including online funders, getting a business loan with bad credit is not only possible, it is now very common.
Once again, it is important to remember that many small business loans rely upon the creditworthiness of the owners. If you have a poor credit history or a low FICO score, you can expect to pay more for your loan.
Before You Apply For a Loan with Bad Credit
Before you apply for a loan, you may wish consider a few options that can give you access to additional business capital at a lower cost.
First, if you have accounts receivable (unpaid invoices) from your customers, you may wish to consider invoice financing or factoring. You may still need to submit a credit history, but the decision to lend and the interest rate will be largely determined by the value of the amounts you are owed from your customers.
Secondly, ask yourself whether you can wait to apply for a loan. The reason for this is to do some personal credit investigation and repair. This is especially true if you have not monitored your credit closely. It is quite common for credit reports to be inaccurate or out-of-date.
Reviewing your credit history and asking the reporting agencies to remove inaccurate, outdated or derogatory credit reports is often successful. Many people can significantly increase their credit score in this manner.
You will need to get a copy of your credit report. You may do this free once per year at places such as Free Credit Report. Checking your own credit score will not hurt your score. However, other inquiries from potential funders will likely lower your score, be conservative when allowing people to check your credit history.
Once you have reviewed your report, look for inaccuracies or outdated entries. All derogatory remarks on a credit report have an "expiration date" and must be removed from your report after this date. Some experts suggest that you dispute all derogatory remarks on your report because it does not hurt your credit score to do so and if the creditor does not respond to the dispute after 30 days, the entry must be removed. It's essentially a no-lose situation.
Another alternative to applying for a traditional term loan with weak credit is consider a business credit card. Business credit cards offer up to $50,000 credit line and are easier to get than a traditional term loan. They also have an immediate turn-around time.
Also, taking a business credit card and making your payments on-time will help build your credit.
Working with a Biz2Credit representative, you will be guided through these steps towards securing a business loan with bad credit. Your loan representative may also suggest alternatives and instruct you on best practices towards improving your creditworthiness.