How to Get a Small Business Loan in Deerfield Beach (even with Bad Credit) – 5 Best Tips
Getting the best loans for small business can seem impossible. Right?
Especially when you have bad credit.
The lower your credit score, the harder it is to get financing from a bank. After all, those traditional lenders otherwise know as banks, aren’t interested in giving you a break. They’re interested in making as much money as possible. Fortunately, there are 5 ways that you can still get the financial assistance you need even if your credit score isn’t worth bragging about. Just consider these five simple tips and tricks.
TIP #1 Alternative Lenders
You’re probably not going to get a small business loan from a bank if you have poor credit. That’s just a fact. Banks will check with the major credit rating services before even looking at your application. Any score lower than 680 will disqualify you from the majority of traditional lenders. Many banks will even deny businesses with a 690 – 719 credit score. You might say that they only recognize two types of potential borrowers: perfect and delinquent.
Top small business lenders, thankfully, are much more flexible. They look at factors like recent cash flow because they realize that your credit score isn’t everything. In fact, some best business loan companies will work with you even if your credit score is as low as 500. To start all they need to see are the past 3 months of bank statements. Even a seasonal business can get approved by providing the business lender with the past 12 months of bank statements.
- fixed payments
- payments can be daily, weekly or monthly
- fixed term from 3 months to as much as 60 months (although terms are being shortened)
TIP #2 Credit Partner
Bringing in a business or credit partner can also help you get the credit line you need. This is usually done in the form of business credit cards. A business partner with a great credit report increases your chances of getting approved for a small business loan. This also allows you to negotiate with the lender for a far better interest rate and repayment plan options. Of course, the challenge is finding a business partner who is prepared to risk their good credit score for the sake of your business. If only we all had friends like that. More than likely you’ll run into the following scenario.
“Credit” partners may lend you the money as:
- a loan directly without a lender (otherwise known as debt financing) or
- they may give you the money in exchange for equity (equity financing) and require a percentage of your business or
- a combination of both
If you’re unsure how that works I’d suggest watching a few episodes of “Shark Tank.”
TIP #3 Microloan
If you’re not looking for a hefty amount to borrow, a microloan may suit your financing needs.
By definition, the MicroLoan Program is through the SBA.
Yes, they make microloans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to
- newly established, or
- growing small businesses.
While the average loan is about $13,000 (up to $50,000) there are a few hurdles you must jump over. Namely, you must still be credit or risk worth. This means you have to either provide personal guarantees or collateral and usually it’s both.
If you qualify you can use the money for:
- Working capital
- Inventory or supplies
- Furniture or fixtures
- Machinery or equipment
The one big caveat is that the business loan you secure through the SBA microloan program cannot be used to pay down pre-existing debts or to purchase real estate.
To summarize, in theory, a microloan is typically easier to qualify for because, as the name implies, the loan size is small. As stated above, most microloans are $50,000 or less. When you apply through an alternative lender, and you may still qualify for a much larger business loan with bad credit.
TIP #4 Merchant Cash Advance
This is generally the easiest of all loans to secure.
Because it’s strictly based on your credit card sales.
A merchant cash advance program enables you to sell a portion of your future credit card sales in exchange for immediate cash. This is a good option for businesses that have solid credit card sales month after month but are weighed down by bad credit. Even businesses with excellent credit often prefer merchant cash advances because of the simple daily payments, short-term periods, and straightforward lending process. Remember that your daily payments are based on a percentage of your daily sales or credit card revenue.
TIP #5 Family and Friends
This is what I generally refer to as the 3 “F’s”. Family, friends, and fools!
While it’s common knowledge that family and business should never be mixed, they can often get you the financial boost your business needs to survive. Raise money by making a presentation and sending it to your family and friends. You’ll be surprised by how many in your circle are willing to help you with your current financial state. Or you can consider the various crowdfunding sources like Kickstarter or Indigo.
The good news is…
Small Business Loan Options Are Available
Each of these funding options has its own pros and cons that must be considered before you make your decision. If you’re looking for bad credit loans, alternative lenders usually provide the best, easiest, and most flexible options to meet your needs. So whether you’re in Deerfield Beach Pompano Beach or anywhere in the Fort Lauderdale area, – Sunwise Capital can help.