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How to Get a Business Loan with Bad Credit

How to Get a Business Loan with Bad Credit

Credit is needed in just about every personal and business avenue. Trying to operate a business and needing capital for equipment, employees, marketing, and other things makes it difficult if you have bad credit. Fortunately, there are methods of receiving a business loan even with bad credit.

 

Get a Loan

Now, your annual revenue does need to be there, and they can start looking at a typical account such as a PayPal account. They will also pull in other accounts you may have, be it personal or business. Also, you must have some online bookkeeping software. The application is quick and to receive funds into your account is quick as well.

 

 Check Out SBA Loans from Your Local Bank

If you have a personal relationship with a bank, check out a Small Business Administration (SBA) loan with them. Banks approve these more so because these are government backed loans. If you were to default on them, the government would help you repay these loans.

The most important factor in getting approved for an SBA loan is to prove to the banker how your cash flow will pay off the loan. For startup businesses, you should have some proven business experience that can lead to the cash flow needed.

 

Check Out Web-Based Lenders

There are thousands of web-based lenders out there, some backed by banking institutions, while others are not. These lenders, however, have microloans they offer to business owners. A microloan is a small loan ranging from $500 to $100,000. Financial institutions typically do not lend these out to business owners because they do not make much profit for the bank.

Now with a business owner looking for a business loan with bad credit, these web-based lenders know you are in need, so some of these rates are pretty hefty. The good news is, some lenders report to the major credit bureaus, so this could increase your credit score.

 

Use Your Personal Credit Card

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All business owners do not have business credit. If this is you, you may need to fund your business using your personal credit card you already have. If your credit card limit is too low or close to the limit, speak to the credit card company about increasing your limit. It may be a hard credit hit in some cases, though, but it is a start. You can then charge what you need or take the cash out.

 

Apply for Grants

A business does not have to thrive off loans alone. You could also apply for a business grant. A business grant is free money! You do have to put in some research and time to apply, but there are many government and local organizations that have grant money available. Some grants, especially government funding grants, have stringent requirements. So you must be sure your business qualifies before wasting your time applying.

There are courses you can take online such as through Udemy that will teach you how to find these grants and apply for them. This is a small investment that can help you out for years to come. If you do not have the time to do the research and paperwork, you can hire grant writers.

The above five methods can help you get the capital you need to run your business. It takes some research to find the best loan and rates, but business loans do exist for those with bad credit.

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