Financing your dreams in these uncertain times isn’t easy. You may have to bend your knee to some private lender or traditional financial institution. Sometimes, you do not get a loan even after asking for financial assistance. The reason for rejection is bad credit. This does not have an easy fix. You may end up asking your friends or family.
But if you want to steer clear of this option, we might be able to help small businesses with less-than-perfect credit. You would have to wait a while to get intel on all loans for companies with bad credit scores. Building your credit history might take longer than you expect. That’s because there is little stability.
However, strengthening your financial health isn’t impossible. So, don’t worry. The right investments in your business can help you overcome these challenges. Some private lenders may have a minimum requirement of 500 as a secure credit score for the past half year. Others may have different conditions, like $30,000+ per year.
What Does a Business Loan Product Include?
Here are a couple of things a business loan product includes:
- Equipment financing
- Business sustainability
- Expansion plans
- Working capital
- Merchant money advance
- SBA loans
Just a heads-up for small businesses with a bad credit history that expect a higher interest rate. If this is not clear, we want to bring it to your attention. So, don’t expect that you will get lower fees or interest rate quotes from existing lenders.
The Best Small Business Loans for Companies with Bad Credits
OnDeck
OnDeck is a great option for short-term loans. If you know your project is destined for instant success, this should be your go-to loan. You can get a loan of $5,000 to $250,000, which is plenty of money to execute your business plan. However, you need to have a minimum credit score of 625. This is a low bracket, but some companies don’t even fall in this range. But don’t lose all hope because the repayment time is of 1 year.
Pros
- You receive the loan on the same day of approval.
- The credit score requirement is as low as 625.
- You can get a loan of up to $250,000.
Cons
- There is a clause of a minimum annual revenue of $100,000.
- Operating for over one year is the minimum requirement.
- Small businesses in Nevada, North Dakota and South Dakota don’t qualify for this loan.
Biz2Credit
We would classify Biz2Credit as working capital loans. You can receive a loan as big as $2 million. That’s a huge stepping stone for many small businesses, as they don’t have enough funding to execute their plans. However, your company needs to be up and running for at least 6 months. There are more perks to choosing this option over others. That’s because the minimum credit score requirement is 575.
Pros
- Biz2Credit has the lowest credit score requirement.
- You need to show an annual income of $100,000.
- The application process is quick and easy.
Cons
- You won’t get the loan approved altogether. There are biweekly or daily payment options.
- The qualification requirements are strict.
- Not the best option for startups.
Kiva
Kiva is a great loan option for companies with no history. It falls under the category of crowdfunding loans. You can acquire a loan of up to $15,000 to make your dream come true. There is no such requirement for how long the company has been around, like other loans. Since you are free of this worry, we have other good news. You don’t need to show a minimum credit score. This opens doors to a lot of borrowers, which wouldn’t be the case with traditional financing options.
Pros
- You don’t need to put anything you own as collateral damage.
- There is no requirement to show proof of cash flow documents.
- Improving your non-existing credit score is out of the picture.
Cons
- These loans are crowdfunded, so you need to sell your idea to the audience.
- There is a maximum cap of $15,000 for all loans.
- It’s not a feasible option for long-term funding.
Tips to Compare and Contrast Loans Options for Small Businesses With Bad Credit
Here are some tips for choosing the best loans for your small business with a solid credit score:
- Don’t forget to compare the interest rates. Applying for loans can be tricky, especially if you are new to it. You need to research and find something that ticks all your boxes. Ask the lender about any upfront or hidden costs so you’re not in the dark.
- Flexibility is the key when it comes to choosing the right lender or financial institute. You should check if there are options for daily or monthly payments. This can help you make timely payments to suppliers and speed up production.
- Check a minimum credit score requirement before signing a contract. You don’t want to be stuck in any technicalities. Some lenders may go as low as 500, while others may not even consider small businesses with a credit score up to 625. So, be careful.
How to Get a Business Loan With Bad Credit?
Here are some tricks and hacks to get a business loan with bad credit:
- Focus on improving your credit score
- Check your business and personal credit
- Think about a co-signer
- Compare the best loan options
Can You Get a Loan With Bad Credit?
The answer is simple. You can, but it requires a lot of hard work and effort. Without research and your due diligence, it’s tough but not impossible. Check out alternative options, such as merchant cash advance or invoice factoring, in case a traditional financing institute rejects your application. Don’t give up hope! Shoot for the stars.
