Qualify For A Business Loan With Bad Credit

Business loans can provide vital funding to allow you to grow your organization. Many people think that they need excellent credit to qualify for these loans. However, this is no longer the case. There are plenty of ways to get a bad credit business loan. Let’s look at some of the things you need to get the money you need.

What Is A Credit Score And Why Is It Important?

One of the main ways that lenders assess businesses is by analyzing their credit score. However, some businesses might not have a credit score. This is most common among new businesses, as there won’t be enough data to assess you. In this case, they will use your personal credit score.

It’s important you know what your credit score is when applying for loans. You’ll be able to check this online. When you’re looking at these reports, make sure to point out any errors. Getting these mistakes fixed might allow you to improve your credit score. Over time, you’ll be able to improve your credit score. If you make this a long-term priority, this will help you build a stronger business. The credit score will impact how much the lender will charge you. If you have bad credit, you might be deemed a riskier borrower. As a result, you will need to pay higher interest rates.

What Factors Determine If You Qualify For A Loan?

For many microlenders, your credit score is just one factor that they will look at. For example, they will often also look at key business statistics. One of the most important factors is the amount of revenue that you are getting each month. They will also need to consider how consistent this revenue is. Lenders might also consider how long you’ve spent working in the business. For some, they might want to see a business plan, to show that you’ll use the loan to help the organization expand. At South Florida Funding Group, we’ll talk you through the documents that you need to provide.

Research Your Options

If you have a bad credit score, it’s important to make sure that you’re reviewing all the options you have available. This is one of the areas that people will struggle with the most. Many larger banks and lenders won’t want to work with you, as they might deem it too risky. However, this doesn’t mean that you won’t be able to get a loan. Instead, you’ll just need to look a little harder to find the right option for you. Let’s take a closer look at some of the most popular alternative business funding options for you to explore.

Merchant Cash Advance

In a Merchant Cash Advance (MCA), you’ll get a loan from a lender. The lender will then be entitled to a percentage of your sales until the loan is paid off. Typically, this will take between four to 18 months, depending on your revenue and how much you get loaned. There are many reasons why this type of loan structure can benefit a small business. First, it tends to be a more flexible arrangement. This can help ensure that you’ll be able to make the required repayments. This type of arrangement can allow you to get money quickly. Typically, you will be able to get paid within two to five days.

Unsecured Business Credit

One of the most flexible forms of funding will be an unsecured business credit loan. In this model, the lender will approve you for a certain amount of money. The amount of credit you can apply for will often depend on your credit history and the size of your business. Then, you’ll be able to borrow money when you need it. You’ll only need to make repayments on the money that you have borrowed. Many people prefer this option, as it allows them to deal with expenses when they occur. It can also make it easier for you to move quickly, to take advantage of emerging opportunities. Typically, you will be able to get access to unsecured business credit fairly easily. In most cases, you’ll be able to get your money within three days.

Unsecured Business Loan

Another option that you might want to explore is an unsecured business loan. In this model, you won’t need to provide any collateral, to make sure that you pay. Instead, you’ll need to provide a personal guarantee. This means that you will be held personally responsible for the loan. Also, if you have a poor credit history, you’ll often need to pay a higher interest rate.

Secured Business Loan

A secured business loan ensures that the lender will have some collateral. This can be a piece of equipment or property. If you default on the payments, they will be able to take this property. This can make lenders more likely to give you money, even if you have bad credit.

Equipment Leasing

In some cases, you might want to get a loan to purchase an important piece of equipment. If this is the case, you might want to get an equipment lease. This will allow you to rent the equipment, rather than needing to buy it outright. You’ll need to pay a monthly fee to the lender. If you miss payments, they’ll take the equipment back.

Equipment Financing

This is similar to equipment leasing. In this option, you’ll make monthly payments on the equipment. However, at the end of the loan, you’ll own the piece of equipment. As a result, many business owners prefer to use to purchase more important equipment, which they plan to use for the long term.

Conclusion

Many business owners think that bad credit will make it impossible for them to get a loan. However, this isn’t true. As we’ve seen, there is plenty of alternative funding for small businesses for you to consider. At South Florida Funding Group, we are passionate about helping smaller organizations get the money they need to grow. So, give our team a call today to find out how we can help you.