Posts tagged: small business loans with poor credit

Poor Credit Business Loans

It takes money to get a business off the ground. How much money? Well, usually more than you think…and more than most banks are willing to lend you. It sounds a little harsh, but if you’re looking for startup capital, bank loans can be a very tough route to financing. Some would say impossible. If you’ve damaged your credit at some point, it’s going to be very very hard to get poor credit business loans.

So, the first thing I’d say about this subject is that if you’re looking for business loans for poor credit, open your wallet and look at Mr. Visa, Mr. Mastercard, and Mr. American Express. Credit cards are really the only poor credit business loan I know of.

Now, if you already have a business up and running – and it has consistent sales – you might have a slightly better shot. Banks are much more amenable to the idea of lending money to a business to help it grow (as opposed to lending for the purpose of getting it started). So, if you have a year or more of sales data, and you can show other factors that will give your business a further sales boost (like a new website or a recently launched direct marketing campaign), it’s possible you’ll get a loan in spite of your credit.

I recently learned about another alternative to business loans for poor credit; they’re called cash advances for business and you qualify for them strictly on the basis of your sales credit card receipts. In other words, when you go to apply for this cash advance, all the lender will want to see is several months’ worth of credit card receipts from your business, and then they’ll basically lend you money against your future sales.

The rates and terms on these cash advances can be a little steep, so you have to ask yourself how bad you need the cash, and how much it will really help your business grow. If this small cash infusion is the last obstacle between you and a growth spurt, I say go for it.

Business Loans for Poor Credit

Starting the business is the American dream. Well, it’s my American dream. It has been since I was a young kid – probably 12. I want to run my own shop, manage my own time, and have my customers be my only boss. There’s only one problem. Starting a business takes cash – cash I don’t have. So my options are to borrow money from friends, family, or the bank. My credit is no good and my friends and family are just as broke as me – so I have to hope I can find a bank that offers business loans for poor credit.

One thing is for sure – if a bank is going to lend me any money at all given my damaged credit, I’m going to have to make a pretty compelling case that I’m not a huge credit risk, even if that’s what the statistics say about me. I think if I put the right pieces together I’ll be able to get the poor credit small business loan I’m looking for.

Number one, I need a rock-solid business plan. Before I walk in to that loan officer’s office I’m going to make very sure I have my plan and my presentation nice and polished. I’ll be able to show him that I have a product for which there is a sizable market, an intelligent and efficient plan for getting the word out about my product, and conservative but encouraging projections of cash flows during the first 12 months I’m in business. Of course I can’t elimiate all the risk the bank is taking by giving me a loan, but I’ll show them I’m willing to do whatever it takes to make my business work – I’ll give up food, sleep, and a social life in order to watch my baby grow.

Of course it won’t be easy. The vast majority of traditional banks have no interest in giving business loans with poor credit. They’re looking for people with an immaculate credit history, collateral, and even a business that’s already cash flowing before they’ll be willing to lend a single dollar.

That’s why if you’re in the same situation as me you might want to consider looking for a private lender. It won’t be easy, but if you can find a person with some decent liquidity and an entrepreneurial spirit you may find they’ll be willing to take a  calculated chance on you and lend you the money to get off the ground. At the same time, they may not see the benefit of lending you the money (since you’re considered a credit risk). If they really believe in you and your product they may only want to give you the money as an investment and take a percentage of the business in return.

However you raise the money for your business (whether it’s through a poor credit business loan or an investor), never give up on your dream. America needs more committed entrepreneurs to help our economy thrive in the long term.