Obtaining Small Business Loans Despite Having Bad Credit

It is of high priority for small businesses to build up a good credit score, something that they can definitely use when it’s time for them to approach a lender for added financing. What if you have a bad credit history, what’s your small business going to do now?

 

Though your opportunities to obtain varied financial products would surely be limited by your present predicament, know that there are still some lenders who do offer small business loans despite bad credit.

 

Before you approach a potential lender, however, determine first which type of business loans does your company really needs. There are actually two types of small business loans you can apply for.

 

If your business needs a specific amount of financing and you would like to increase your chances of having your loan approved, consider getting a secured small business loan. Upon application, you may be required to present collateral as a guarantee for your loan. This collateral may be a physical asset, such as real estate properties, or an amount deposited in a bank. Consequently, the risk for lenders in this type of small business loan would be reduced, allowing them to provide you lower interest rates and amenable payment terms. It also goes without saying that it is you, are ultimately responsible of the risks should the loan go bad.

 

However, if you still aspire to obtain small business loans despite bad credit yet do not wish to put up any personal asset as collateral, it would be advisable for you to apply for an unsecured business loan. The downside to this kind of financing tool is the much higher interest rate combined with strict terms of payment. There is also greater possibility for your application to be turned down, especially if lenders would delve into your credit score history and would not like what they see. If this happens, try to find some ways to alleviate their concerns. If your business is enjoying financial stability despite the bad credit history, have the necessary financial documents at hand to prove this. Another option is to enlist the help of the Small Business Administration to improve the chances of getting your small business loan application approved.

 

And lastly, consider how well your business can adhere to the payment terms offered by the lenders. Get a small business loan with terms you can realistically fulfill. This way, you can use the loan you obtained as a tool to steer your small business out of a disparaging credit score and look forward to better financial opportunities in the future.

 

For more information on building your bad credit and business loans, visit http://www.buildingmybusinesscredit.com, a web site that provides business credit information to small and home businesses.