20 Methods to Get a Business Loan with Bad Credit
Securing funds for your business can be difficult, especially if you don’t know where to start. Having bad credit can make this even harder, but that doesn’t mean it’s impossible. There are ways to get the business loans and funding you need even with bad credit. From solid planning to Kickstarter, here are 20 methods that you can use to get a business loan with bad credit.
Look for Peer-to-Peer Lending
Dealing with financial institutions is a complicated process. They’ll want your financial documents, and they’ll want to do credit checks. Peer-to-Peer lending is an option that will allow you to skip this process entirely. It can give you quick access to your funds without having to jump through all the usual hoops.
Fix Your Personal Credit
Your personal credit can play a significant role in getting a business loan. Getting a credit score based on your business history is difficult if you haven’t established your business. This means that it’s essential to work on your personal credit before you try to secure your business loans.
Lenders are much more willing to lend you what you need when you have a cosigner. When approaching a potential cosigner, you need to make sure that you don’t seem too pushy. Getting a cosigner can be a delicate process, but having one will make it much easier to get a loan for your business.
Prepare Your Documents
Lenders want to know that you’re a safe bet before they lend you money. Proving that your business is generating revenue and having all your documents ready is the way to do this.
To give an example, here are a few of the documents you should have ready:
- Income Statements
- Balance Sheets
- Tax Forms
Be sure to get your documents well organized before you take them to a potential lender. Excellent organization skills will help your chances.
Have a Solid Business Plan
Having a solid business plan can make all the difference to a potential lender. And, the better laid out your idea is, the more likely you’ll be able to secure the financing you need. There are plenty of resources available to help you come up with the best plan possible. You can find templates online or even consult professionals to help you create a solid business plan. If you do it right, you will certainly wow the lenders.
Bringing collateral is a more significant risk for you, but it will make you a much safer bet for lenders. One of the best forms of insurance is your home. Yes, this is a significant risk, but you will be much more likely to secure a substantial loan that will take your business to the next level.
There are other forms of collateral that you may be able to use such as:
- Blanket Lien
- Insurance Policies
- Investment Accounts
Shop Around for Different Lenders
Looking for a lender is just like trying to find a great deal on a car. You don’t always want to go for the first offer you get. Shopping around for different lenders will ensure that you aren’t getting ripped off. Don’t settle for a high-interest rate just because you don’t think you can do better. Talk to plenty of lenders before you make your decision.
Show Your Business History
The history of your business is critical when trying to secure lending. If you haven’t been in business for long, you need to make this a priority. You’ll need to show every little detail of your business to the lender to ensure them that you’re doing everything right. Be able to show them:
- History of Employees
- The Industry You’re in
- Your Past Performance
The more data you have and the longer you’ve been in business increases your chances of getting the funding you need.
Dress the Part
“Dress for success” is something you’ll hear a lot in the business world. There’s a reason for this. Wearing your best outfit to a meeting with your potential lender can make a massive impact on their decision. In fact, it’s a worthy investment to buy some great dress clothes if you don’t already have some.
Remember to Network
The better your networking is, the more likely you’ll be to find a lender willing to fund your business. If you can find an investor, you can forget all about your credit score. You need to make sure you are networking whenever and wherever possible.
Work With a Credit Restoration Company
A credit restoration company will help you restore your credit and get the score you need. It’s their job to help you fix your credit so you can get the financing you need to take your business to the next level.
Write Letters to Credit Bureaus
You would honestly be surprised by how much credit bureaus are willing to work with you. If you have some dings on your credit rating that you don’t think should be there, write the credit bureaus. Most of the time, they’ll work with you to get these issues resolved.
Create a Game Plan
You need to have a good game plan when it comes to financing your business. Set realistic business goals to help you get a closer understanding of the funding you need. Taking the time to do this will make the process seem much less overwhelming.
Don’t Take “No” for an Answer
Sometimes you need to stand your ground and be persistent to get the lending you need. If you don’t take no for an answer, eventually someone will be willing to help you out. Additionally, your determination and persistence will speak volumes. Never stop trying until you find a way to finance your business.
Use Peer Funding
There are plenty of sites out there that can help you fund your business if the more traditional methods aren’t working for you.
GoFundMe and Kickstarter are both excellent ways to get the funding you need. There are a lot of businesses that have found success through these methods. If you have a large social media following, this could be an excellent way to utilize that to grow your business.
Leverage Your Assets
Take a moment to look at your assets. You may have more than you realized. You can use these assets to raise money when you have poor credit. Refinancing your car or home can give you quick access to equity that could help you build your business.
Look for Investors
Investors are a great way to avoid having your credit speak for you. Investors will rarely check your credit score. Typically, they are much more interested in your business plan and the future of your business. There are online resources that you can use to help you find the right investors for your business.
Look for Online Options
When it comes to online lenders, many are willing to work with people who have less than perfect credit. Search for them and apply to any that you are able. Most of the time, you will only need to provide your bank account information, and you’ll have the funds in less than a day. You need to make sure that you research every lender you decide to work with here. Only work with reputable companies and watch out for scams.
Work With a Financial Professional
Financial professionals are a surefire way to help you find the best way to finance your business. They have connections that they can use to find the right lenders for you. They will also be able to help you find the right types of financial tools to restore your credit.
Bootstrap your Business
If you still can’t find any ways to fund your business, you can always get a job and funnel all of that money into your business. It can be rough and painful, but it’s still an option when you have no other choices remaining.
These are just a few of the many different ways you can get a business loan with bad credit. It may feel like you’re always fighting an uphill battle, but there is money out there for business owners like you. Be persistent and always stay determined. Never give up. You will find the funds, and you will be able to take your business to the next level.