Posts tagged: loans to start businesses for bad credit

Startup Business Loans for Bad Credit

No matter what anybody says, the American Dream is still to own your own business, your own income stream, and your own time. I’ve been a full time entrepreneur for a while now, and as I write this I’m sitting in my office feeling happy and grateful that I have a lot of say in my own financial destiny. But the reality is that starting a business can be an intimidating thing, and getting it off the ground usually requires more cash than most people have.  And if you’ve hurt your credit at some point you might have to see about qualifying for bad credit startup business loans.

The fact is you can still get financing if your personal credit score is pretty low, but you can forget about traditional banks. If they see that your FICO score is below 650 or so, there’s just not much chance they’ll want anything to do with you. To combat your own bad credit, the best place to start is to try to build up some kind of corporate credit. You need to set up an official entity, such as an LLC or other corporation, and immediately apply for some small lines of credit through that entity.

Many credit card providers will have some kind of bad credit credit card for startup businesses. Be prepared for high fees and APR’s, but if you can handle those hurdles you’re going to be able to get at least some kind of credit lines as a business. Even if you get a $300 credit card and start using it for normal purchases, you’ll be on your way to establishing some corporate credit. Down the road you’ll find that local banks, credit unions, equipment manufacturers and other lenders will consider you much less of a risk if you’ve shown some improvement in your personal credit in combination with some corporate credit history.

Here are a few things business financiers will be looking for when deciding whether to give you the startup small business loan you need to get things going:

  • you’ll have to be compliant with a list of 20 different criteria (for example: whether you have a business name, whether you have a business phone number, whether you’re listed with any of the major business review companies, etc)
  • you’ll need three national credit reports – each of them reflecting your credit worthiness
  • up to five credit lines directly from vendors that report to the major credit agencies

Of course there are other criteria, but these are the things to be most concerned about as you try to get small startup business loans. The main thing will be perseverance, as this is the stage where many would-be entrepreneurs get frustrated and quit. All I can promise you is that it will be worth any effort to get your own business off the ground.