The short answer is yes, you can and this short guide shows you how. According to FICO, bad credit means a credit score between 300 and 629. This low credit score is one of the reasons why loan applications by small businesses are usually rejected by banks. Banks assume that a person with a low credit score is unlikely to pay back. However, having a bad credit doesn’t mean there are no alternative funding options. So, what options do you have?
To be honest, the options are not ideal. But here are the top five options that I highly recommend;
To have access to this kind of loan, you must meet the following conditions;
- Your loan amount cannot be more than 10 percent of your revenue
- Your sales revenue must be at least 100,000 dollars per year
- Your credit score must be at least 550
If you meet the conditions, you can be approved for the loan in less than one week
Friends and family
You can get a loan from friends and family provided they are interested in your business. However, you should only consider this option if…
- The amount of cash is not too high
- You have rapport with some extended family members whom you can also reach apart from your immediate family members.
Typically, a microloan is mostly given by credit unions. Although apart from credit unions, there are other lenders. You can easily get a micro loan even when you have a bad credit since the maximum amount that can be given by a micro loan lender is 50,000 dollars. This is one major reason why these lenders accept those with below average credit score. If you don’t need more than 50,000 dollars for your business, I suggest you use this option. See more.
Business credit card
You can get financing and start building good business credit simultaneously by securing a credit card in your company’s name, make purchases and one-time payments. However, you still need to familiarize yourself with each credit union’s eligibility requirements – credit limit, interest rate, and terms of payment.
Merchant cash advance
This is also known as a business cash advance. If you are in need of cash that doesn’t exceed 10,000 dollars, you can make use of this option. However, you need to bear in mind that it is almost certain that you will pay more in the long run than the initial loan because the interest rates of cash advances is usually very high.
And if you miss a payment, the interest rates will even become higher. Hence, you need to be sure that you are ready to make your repayments in time before opting to apply for this type of loan.
Most of us also have bad credit loan. So, even if you choose from the ‘bad credit loan’ options suggested above, the future of your company lies in the improvement of your credit. After raising your credit score, you can easily secure better funding for your company. More details in site: https://www.aspirebusinessloans.co.uk/