How to Get Small Business Loan Despite Bad Credit Ratings?

Answer 1

It should surprise and delight many of you, that small business loan for people with bad credit rating is available.

Now the question arises; how can one avail of such financing. Well, read on….

To be frank, don’t even think of going to banks. No bank worth its salt is going to touch your business loan if you have personal credit score less than a certain limit. But there is much more to the business lending than just banks.

For other types of lenders, your personal and business credit score will still be important parameters, but not to the same degree as the Banks.

Let me explain the credit score first. In short, your credit score is a numeric result generated from an algorithm used by the credit reporting agencies to determine an overall level of credit worthiness. The algorithm considers multiple factors that contribute to your overall score.

Bad credit score apart; following can also make you a bad credit candidate:

• NSF Checks
• Recent Late Payments
• Historical Bankruptcy
• Loan Write-offs and Settlements
• Credit In Arrears
• Numerous Credit Inquiries

Remember; the more recent your repayment bouncing, the more difficult it will normally be for you to acquire any type of financing.

Take the following steps before applying for bad credit loans:

• Separate your business credit from your bad personal credit by forming a corporation or LLC (Limited Liability Company) and applying for an EIN (Employer Identification Number).
• Use your EIN to establish a business credit profile completely separate from your bad personal credit.
• Build a strong business credit profile while repairing your poor personal credit.
• Prepare separate financial statements for your business.

Bad credit financing is usually provided by asset based lenders or cash flow based lenders.

Asset based lenders provide financing against assets such as: real estate or machinery.

Bad credit financing from asset based lenders can be very expensive. They are also very stringent in case of any miss in repayment: they seize the assets pledged as soon as possible as per law to liquidate them.

Success in securing bad credit financing depends on the following factors:

- Your ability to explain; why and how the bad credit happened and how you tried to avoid all that.
- Your short term ability to repay.
- The type and quality of the assets and/or cash flow.

Business Cash Advance, a Good Alternative:

You can also opt for cash advance. Business cash advance is not a loan and the organization offering this cash advance gets their money from the credit card sales that the business does in a specific period, there by reducing the burden of paying back the loan, and the terms and conditions to qualify for such cash advance are also relatively simple.

There are quite a few organizations which provide such cash advances. Organizations like MerchantCashDirect usually provides cash advance for working capital needs. They more often than not, target specific industries. To expand the example of above mentioned organization: They seek to provide funds to people into restaurant, retail or service industry processing at least $4000 in credit card receipts per month.

You can not wish away your bad credit history, but you can improve your bad credit financing options by starting to pay your debts on time, thereby reducing as much debt as possible.

Answer 2

Don't.

If you have a bad credit rating then it is most likely because you can't handle money and thus should not be running a business.

Once you've got control of your finances then you can start looking at starting a business but if you can't control your spending or pay your bills on time you'll have a hard time succeeding in business (your suppliers and employees will NOT enjoy being paid a month late).

Answer 3

It depends upon how much you need and exactly what you need it for.

If you need only a few thousand dollars, try friends, family, friends of friends, etc. If you need several hundred thousand, you might try Angel Investors (the local Small Business Development Center should be able to connect you). For millions, the only answer is Venture Capitalists.

Now, if the money is for physical goods, maybe you can partner with the company you're buying the products from ... in other words, get the supplier to front you for the product in exchange for paying them more than face value. If the loan is for labor, maybe you can get the employees to invest "sweat equity."

In other words, be creative. If you have a great idea and you have a track record of success, you should be able to get funding, even if you have bad credit.

Answer 4

If you are talking about getting loans from banks, it will not be easy; if not downright impossible. Banks and other traditional lending institutions are looking for your CAPABILITY TO PAY the loan -- and having a bad credit history tells them that you are not able to manage finances well. So how can they expect you to pay them?

Your best bet is to seek loans from

- family and friends
- peer to peer lending sites such as Prosper.com, but be prepared to get higher interest rates
- or find investors who will bankroll your business

Otherwise, wait until your credit situation improves before embarking on a business

Answer 5

I HAVE BEEN IN BUSINESS FOR 12 YEARS. MY BROTHER HAS A BUSINESS THAT DID 25,000,000 LAST YEAR.
ALL BUSINESS HAVE CASH FLOW PROBELMS
the best answer is sales,sales sales. kept the money flowing, be careful about taking money out of the business.
my business is contractor. i get 1/2 down to start, but its real temping to spend the first 1/2 before you finish the job, but it will get you in real trouble.
remember loan money costs a lot. most business bottem line is 2%-6% profit.

Answer 6

www.fundinggroupamerica.com helps businesses who have at least 1 year in business and 200,000 in annual revenue.

Answer 7

I founded a very good one on Web. You can see here for more experience ...........

Answer 8

begin small - don't go for the whole million, yet

Answer 9

no way other than selling your assets.