Bad Credit Business Loans
After you have exhausted all of the above possibilities, turn to the option of a obtaining a business loan with bad credit. You may by this point need to take out a much smaller loan than previously. This is awesometastic.
This will save you money in the long run. The less money you require, the less money you have to pay back. That matters even more if you have bad credit. Here’s why.
When you have bad credit, you will not qualify for prime interest rates. Prime rates, the lowest interest rates available, go to those with exceedingly great credit scores. You would need a 680 to 720 to qualify for a prime rate loan. Those are the loans that provide interest rates of ten percent or less.
Bad credit to you might mean a credit score of 300 or so. To a bank or lending institution, it means anything under 680 or so. To a bank, you’re either a sure thing or nothing. Your credit score lets them know how likely you are to pay off your loan.
Remember that when you start a business, you will not have the business’ clout or finances to back your loan. You have your own personal finances. So, if you have bad credit or no credit, you need to obtain as much of your funding from a source besides loans as possible.
Spend a little time building your credit score up. You can start this process by visiting Creditry.com. The site will help you take charge of your credit and get things under control.
You need to get copies of each of your credit reports. You will have three – one from each of the credit reporting agencies. Study your reports to determine whether each is correct.
Complete a report form for any mistakes you find. Each credit reporting agency has its own. The agency will investigate your report and make an inquiry to the organization that issued the credit information.
If it really is a mistake, the agency removes the negative information from your report. If it is not, you will have an opportunity to discuss it with the creditor and make a payment plan. Either way, you will produce the result of improved credit.
You can begin this process when you first start your business financing activities. That way, while people are checking your credit score, potential investors will see it continue to move up. When your score improves while you are applying for funding, potential investors and financial lending institutions look upon this favorably. By the time you have exhausted all other possibilities for funding, you will have an improved score and be ready to apply for loans.
You now need to determine which loan type you want. You may still need a significant amount of start up or expansion capital. In that case, you need a standard small business loan. After all the other funding pieces, you may only need a small amount. That means you could use a micro loan.