Small Business Loans For Bad Credit
If you have bad credit, then you probably already know that it is very hard to get a regular bank loan or a small business loan. A credit score of at least 620, but preferably 650, is required before a financial institution will consider you for any type of loan.
Due to the fact that a credit score of less than 650 isn’t very high, a bank wouldn’t want to take a chance on giving you a loan which will force you to look at other possibilities. If your business is not making a lot of money or you are having a hard time making your monthly bill payments, banks usually won’t give you a small business loan. You will need to find a cosigner for your loan or entertain other options.
There are different options available that you should consider.
One small business loan for people with bad credit is the business cash advance loan. A business cash advance loan has a very high interest rate so you should be willing to pay more in order to be approved for this loan. Although this type of loan may be your only realistic possibility, if you can afford it, then it will be well worth it. Due to the high interest and added fees of this type of loan, you should really put a lot of thought into your decision. This type of loan may be your only choice since banks won’t approve small business loans for people with bad credit.
If your business accepts credit cards as a method of payment, then getting a business loan will be easier for you. The loan company will take comfort in knowing that they can get their money by taking your payments directly from your credit card system in use. This type of loan is compared to a payday loan which works by requiring that you get paid from your job directly into your bank account. The loan company can then be confident that they can get paid quickly and easily by taking their payments from your bank account.
A home equity loan is also something you could consider if you need a small business loan and have bad credit. Your home would be used as collateral making this an easier way to obtain your loan approval. Using your home as collateral makes the bank feel more secure and gives you the chance to get a loan at a significantly lower interest rate. You can make your interest rate even lower by using a cosigner with good credit to assist you in getting your small business loan.