Want to borrow money for a small business but have bad credit? Stop looking. It’s not easy to run a small business.
With the constant need to improve your business through technology upgrades, payroll processes, hiring new employees, or consolidating existing debts, getting a small business loan with bad credit can seem hard and out of reach. But there are often other ways to solve problems in the modern world.
With an alternative funder like Rapid Finance, you can get funding for your small business in a lot of different ways. But before you start, we’ve put together a full rundown of what you need to do to get money even if your credit isn’t good enough for traditional lenders.
Does my credit score matter when it comes to small business loans?
Most of the time, a small business is the only way for its owner to make a living. Even though that seems like a no-brainer, bigger companies often use money from other places to pay for their next improvements, processes, and ideas.
But without access to that outside capital, small business owners often feel limited by their own credit history in terms of how they can grow and improve their offerings.
For years, they’ve been told that to get a traditional loan, they needed to have good credit, a lot of valuable assets, and a clear sign that their income was going up. But that is not true.
Because with an alternative funder like Rapid, you have more quick, easy, and flexible ways to get money than most people know.
Things to think about when getting a small business loan with bad credit
Before you apply for a small business loan with bad credit, there are a few things you should think about that have to do with credit:
- How you’ve paid for things in the past.
- Your ratio of debt to income
- Several hard questions in the past few months
- How much of your credit you’re using
But if you have bad credit and want a small business loan, you should also think about:
- Less time to pay back loans
- Less money will be given
Putting yourself in a position to do well
As the owner of a small business, knowing everything that goes into financing and business solutions can make all the difference. Before applying for business financing with bad credit, it’s a good idea to follow these steps:
Look at your credit rating: Knowing your past and what could hurt your score can help. figure out what options you may have for getting money.
Prepare a business plan: To get capital, you must know where you want to take your business with the small business funding you have.
If you need to, offer collateral: Most traditional lenders need a larger amount of collateral to lend money against, but knowing what you have can help you get money from any lender.
Research your options: Half the battle is just knowing what kinds of money are out there. Learning about your funding options such as a term loan or a line of credit can help you and your business succeed.
The best ways for small businesses with bad credit to get loans
People often think that small business owners with bad credit don’t have many ways to get money for their businesses, but there are actually quite a few. Check out the following ways to get money:
Business Credit Card: A business credit card can make it easy for you and your business to pay for things when you shop. Just be wary of high-interest rates or low limits on how much you can spend. You might have more options with more traditional ways of getting money.
Term Loan: With a term loan from an alternative funder like Rapid Finance, you can get money and pay it back in set amounts and on set dates, giving you more freedom.
Line of Credit: A line of credit makes it easy for small businesses to get money when they need it. With a line of credit, you can use the money whenever you need to, without giving the recipient a big chunk up front.
There are also other ways to finance a small business that might work well for you if you accept credit cards or have invoices that haven’t been paid yet:
Merchant Cash Advance: A merchant cash advance, or MCA, is a way for small business owners to get cash quickly and easily by using future credit card sales.
Your business can get funding in as little as one business day if you can get a cash advance in different amounts and pay it back in different ways.
Invoice factoring: Like an MCA, invoice factoring lets you use your incoming invoices to get a cash advance ahead of time. And, like an MCA, it’s quick, easy, and gives you flexible payment options to give your business as much freedom as it needs.
How to find the right lender?
To get money for your small business, you need to know where to start. Most owners will look for traditional funding options, but you might want to look at something from private lenders melbourne if you have less collateral or bad credit.
Most alternative funders will let you get money in different ways, depending on what your business needs. Most of the time, they need less collateral, are easier to apply for and can be given to people with bad credit.
Traditional lenders, like banks and other financial institutions, only give loans and lines of credit to people with good credit and a lot of collateral to make sure they can pay them back.
They also look closely at how profitable the business is and are very careful about to who they lend money.
