Is it very easy to get small business financing when your credit is bad?

Answer 1

You could try looking into financing from other companies, as opposed to banks and financial institutions. They would be the only ones willing to take a gamble on a business proposition, but even then, unless your plan is absolute gold, it can be tough to find an interested party.

Speak with every company you plan on looking into for loans, and speak with them personally. Obviously, terrible credit could affect decisions in certain ways, and your credit is definitely going to be checked. But, your loan suppliers will be more interested in your idea for a business, and the potential it has to make THEM money, too.

There are quite a few grants and loan books available to the public where you can research many of the terms and conditions for company loans. Interestingly enough, a halfway decent one is: Matthew Lesko's book - you know - that little annoying guy who wears the neon suits pocked marked with question marks. There are actually some really decent resources in his books, but there is also a bunch of junk, so just read it thoroughly.

You should be able to get a business off the ground, even with not-so-good credit. You'll need to offer some kind of collateral against the loan you're taking out, NOT including the real estate of the actual business - your house for example, and any other assets you may own, depending on the size of the loan. If anyone asks that you do this, be extremely wary - or be 100% positive that this company idea isn't going to eventually fall into Chapter 7 bankruptcy - where you could be forcefully required to sell all of your assets to pay off your creditors. It is a completely legal practice, and many people end up losing EVERYTHING when their business goes under. You have to remember this at all times,. because many fledgling businesses never make it past their first year. Starting a business is not easy, especially if you're wanting to build a brick & mortar establishment, so just weigh your options carefully.

So, to answer your question: it is possible to obtain small business financing even with questionable credit, but only if you look in the right places. Don't walk straight up to your bank or credit union asking for the loan, because they'll just look at your credit and laugh. Instead go to a popular bookstore like Barnes & Noble or Walden Books, and in the Business section you'll find plenty of books on companies that finance other companies. Buy one of those books and start doing your research. Don't settle on anything until you are satisfied with the terms being offered. Sorry for not quoting any good sources to try first, but you should really be the one who finds a financing company that is right for you.

Answer 2

Unfortunately it is the same for a small business owner to get business financing as it is him or herself as a person.
The reason for this is all small business owners and their businesses are classified as the same thing, that is why they are called sole traders.
If you have a bad credit rating you will find it very difficult to purchase stock, and without stock you cant do much except pay cash for your stock.
However, all is not lost, depending on what type of business you have or want, you can build your credit rating back up again, problem is it doesnt happen over night`
If it is that bad that you cannot get a credit card you may be able to get a debit card. Only difference is you can only use it to cover the amount that is in the account, you still have all the flexibility you have with a credit card but you must deposit money into the account and use only that amount. Thats the same as my ATM card you might say....yes but if a bank can see you are being responsible with your debit card and regulally putting money into it for a period of time then they will look at you for a credit card later...The best piece of advice i can give you about a bad credit rating is dont get one, be responsible. Heres a piece of philosophy for you for bad creit ratings

A credit rating is the same as a persons good reputation, they take years to get, but one wrong move and they are gone forever. hope this has helped you out, any further questions email me or post to my blog

Answer 3

NO -- unless you have other factors going for you such as

- collateral
- co-signer and guarantor with good credit
- you can show you have significant experience in the industry
- you have shown management experience, or have someone on board your business that has the right experience and skills

Even if you have a top-notch business plan, bankers won't even look at it if they see that you have poor credit and you have no assets. I've seen this happen many many times with other small and home-based owners.

You have to understand that banks and other financing institutions main goal is to be able to get back their money. They're not giving you money because they want to see you succeed - but because they want to be able to make money from you. With a poor credit, you already showed them that you do not know how to handle money, so you need to show them other plus factors such as collateral. So in case you can't pay, they can get your house or land.

Even if you go to the Small Business Administration, your personal credit history as well as collateral are among the key factors they will look at http://www.sba.gov/financing

Answer 4

Depends on how small your business really is. If you have a well-established business that is incorporated and much larger than just you (say, $5 million in annual revenues, $3 million in assets, 15 years in business, 20 employees, etc.), your credit is not going to matter; the business will have a credit standing of its own. Conversely, if your business is new, has no assets and no financial history, it would be only as credit-worthy as you are.

The above only applies to debt financing. With equity financing, your credit is irrelevant; equity investors will base their decisions on their assesstment of the quality of your business plan.

Answer 5

It is not possible at all. Be aware of the fraud.

BBB just issued another warning about on-line lending sites that offer "bad credit loans" and take you money up-front for "guaranteed loans". It is a scam.

Sincerely,
Marina Lando
President
Business Loan Quest
http://www.business-loan-quest.com
http://www.blquest.biz

Answer 6

No it is not.