Small Business Loans with Bad Credit

Many small business owners find that attempting to acquire a business loan with bad credit can be rather difficult. After getting a start up loan a new business tends to lose money in the first year, causing late payments that slide down their credit rating. Searching for more loans for expansion and maintenance becomes a complicated task. Some entreprenuers are able to borrow from friends and family, but many do not have that luxury.

Bad credit can keep a small business from getting a loan from a major bank, but may not be such a hindrance when approaching a small loan company or a private lender. Funding amounts through one of these mediums may be somewhat limited, and a bad credit score tends to cause high interest rates, so anyone seeking a loan in this circumstance will need to plan accordingly and be prepared for these pitfalls.

Another alternative for the small business owner would be what is called a business cash advance. The requirements to be approved for one of these are not as strict as they are for a loan. When trying for a business cash advance, the applicant must be able to prove that it accepts credit card payments and meets a small minimum requirement for how much is processed in credit card sales each month. Repayments are done on an automated basis according to how you do business, and there is no collateral or personal guarantee required to obtain a cash advance. Similar to a payday loan for an individual, a small business with bad credit may find this to be the most feasible option when looking for a loan of sorts to make an expansion.It is important when running a small business to keep your personal credit score separate from your business credit score. Using the business’s tax ID number to acquire credit, often starting with a business credit card and using it responsibly, will allow a small business to be able to acquire a loan more easily even if the owner has a low score on their personal credit report.

Even with bad credit, there are a few loan options out there for a small business. The most important thing is thorough research and a careful comparison of the most likely alternatives. And, of course, responsible use of any new loan is vital to helping rebuild credit for a brighter future.

Bad Credit Business Loans

I’ve heard plenty of people say the biggest mistake you could make in starting a business is to go in under funded, and I’d have to say I agree with the sentiment. Most new entrepreneurs’ biggest fear is to start a business and have it go poorly. What they don’t realize is that in many businesses, success (in the form of sales) can be just as dangerous to the business as failure if there isn’t enough cash in the bank. Loans are a great way to get that cash in the bank, but if your credit is no good your only option may be bad credit business loans.

Take for example a manufacturing business. Let’s say the business produces some kind of trailers, and it’s just gotten off the ground. Suddenly, orders start poring in. Great, right? Not necessarily. If the business doesn’t have enough cash to keep up with demand, you’ll quickly upset the customers, harpoon your momentum, and then you’re left standing with what could have been a great business. Your only chance would be to get a business loan with bad credit to float you until your sales receipts put enough money in the bank to keep up with demand.

Now, the good news is you’ll find it easier to get a loan from a bank, independent of your credit status, if you already have a functioning business with some history of sales. Bankers’ wallets start to loosen up drastically once they can see an income statement that has any ink on it at all (turns out bankers are rarely interest in pretending to be venture capitalists).

If yo haven’t started making sales yet, getting a bad credit business loan will be just this side of impossible. I hate to say it so bluntly, but banks don’t like risk, and there aren’t many things more risky than a new business being run by an entrepreneur who doesn’t have a clear sense of what his costs are, or what his cash flow is likely to look like on a consistent basis.

So, if you have bad credit, but a good business idea, I’d start talking to every friend and family with some liquidity and an entrepreneurial spirit. I know no one wants to be ‘that guy,’ but if you really believe in your business you have to be ready to go through some awkward social moments to get the thing off the ground and steaming toward its potential.

Hang in there – if your idea is truly sound the money you need will find it’s way to you!

Bad Credit Small Business Loans

I’m an entrepreneur myself, and I have a real passion for seeing small businesses succeed. You always hear the statistics that say that 90%+ of small businesses fail, but you rarely hear why. I can tell you that small businesses fail much more often due to lack of cash flow than any other reason. That’s why small business owners spend so much time looking for bad credit small business loans.

The tough part is the fact that small business loans with bad credit don’t really even exist. At least not in the sense that you’re probably thinking of them. Think about it – small business financing is really tough to come by even if you have stellar credit and a successful business running already. Banks are just very leery of giving loans to small business that are just trying to get their legs under them.

Small businesses do have other opportunities for financing though. An up and coming resource is called business cash advances. Here’s what you need in order to be a good candidate for a business cash advance:

1. Your business has to accept credit cards (not just credit cards, but that has to be one of the forms of payment you accept).

2. Your business has to have some revenue, usually at least $1,500 to $2,000 in monthly receipts.

3. You must be able to provide a history of your sales receipts, specifically credit card receipts that go back the previous three months.

4. Your business needs to already have celebrated its first birthday.

If you qualify for a small business loan with bad credit (or business cash advance) you’re going to be able to essentially borrow up to a million dollars against your future sales, depending on your current sales. In other words, they’re not going to lend you $500,000 if your business is only doing $5,000 per month in sales.

These cash advances sound great, but how much do they cost, right? I don’t want to be paying credit card interest on these programs.

Of course you don’t, and I can’t say for sure how much interest you’ll pay. I’m sure most of the finance companies who provide these services charge a percentage of the cash advance, and they probably offer some kind of discount on higher amounts.

The best part of these cash advances is they’re totally unaffected by any bad marks on your credit score. These folks run their business strictly on the basis of your gross monthly receipts, and this is the closest thing you’re going to get to small business loans for people with bad credit.