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How to Get a Business Loan with Bad Credit

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Financing options for either individuals or small businesses with poor credit can be challenging to find, but bad credit business loans are available from many different lenders.

These loans are designed specifically for companies that have had financial problems in the past and may not qualify for traditional bank financing. You should consider a bad credit business loan from a reputable online lender if you need money fast.

Can I Get A Bad Credit Loan For My Small Business?

Getting a bad credit business loan for your small business is easier than ever. There are several ways to get funding for your existing company.

The current economic climate is more restrictive than ever before. As a result, credit scores are now a critical component in assessing the dangers of lending money to businesses. This year’s global events have made some traditional lenders even more cautious when lending to small businesses.

As an online lender, Sunwise Capital is aware of the aggravation this situation can cause. We strive to provide financing options for all types of business owners, including those with poor credit. Thanks to our simple application process, you can get the money you need quickly and easily.

Talk with a Sunwise Capital Funding Specialist or fill out this brief form.

Sunwise Capital provides a wide range of business financing options as an alternative lender depending on your specific business requirements.

Even if your FICO scores are low, Sunwise Capital’s small business financing offers a simple application process, minimal paperwork, high approval rates, and a quick funding turnaround.

Apply for a business loan with poor credit from Sunwise Capital today.

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How To Best Use Small Business Loans For Bad Credit

Because we trust small business owners to know best what they need to do to grow their company, we don’t place any restrictions on how you can use your funds. You can use your working capital to deal with your business’s challenges or expand and grow.

Is It Possible To Get A Small Business Loan With A Poor Personal Credit Score?

Many small business lenders look at the owner’s personal credit and their business credit score. However, not every lender has a high minimum credit score requirement.

There is one caveat to remember: if you have bad credit, many (but not all) financing options will be more expensive. Your business may be able to qualify for better loans at a lower cost if you have good credit.

If you require funding, you’ll need to know what bad credit business loans are available.

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How to Get a Business Funding with Poor Credit Scores or Bad Credit

Bad credit is no barrier to getting the money you need to grow your company. When you are trying to get a business loan with bad credit, there are only three steps you need to increase your chances of approval:

  1. 1. Know Your Credit Rating
    All lenders use personal and business credit scores to assess the risk of making a loan before applying for a business loan, knowing your credit score, and improving your credit score to determine the best financing options.
  2. 2. See if You Qualify Based on the RequirementsTo be approved for a particular type of financing, you must meet a specific set of criteria. Traditional business loans look at:
    • Personal Credit Rating
    • Time in Business
    • Revenue for the Year

    Determine which bad credit small business loans have the best chance of approval by researching the requirements for each small business financing option.

    What paperwork do I need for a bad credit business loan application?

    • Minimum Months in Business – One year or twelve months
    • Annual revenue – $15,000 monthly revenue or $150,000 a year
    • Loan Amounts – $10,000 to $2M
    • Loan Terms 6 months to 18 months (shorter repayment terms)
    • Daily, weekly, and monthly repayments
    • Personal Credit Score – 500 or better
    • You can apply online and submit a one-page application. Submit last three months of business bank statements
    • Access to cash – 24-hour approvals and same-day funding or next-day funding are available. You can re-borrow after 50% paid off. You will get more money, better rates, and better terms.
    • Competitive Interest Rates
  3. 3. Make the Right Decision for Your Company.Business owners with bad credit can get financing from sources other than traditional bank loans. Consider the reputation of the lender and the eligibility requirements and repayment terms when looking into alternative financing options.

    The best way to get answers to your questions is to talk to a customer service rep. Check your lender’s dedication to helping you succeed and has a track record of happy clients.

Bad Credit Business Loans

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How To Increase Your Chance Of Getting A Bad Credit Business Loan

Preparation is critical when applying for a small business loan, especially if your credit is less than stellar. Before submitting your loan application for these types of loans, think about what you can do to increase your chances of getting the loan approval and getting the best terms possible.

There are three things you can do to increase your chances of getting a small business loan despite having bad credit.

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  1. 1.Provide Collateral
    Small-business lending is inherently risky, and an unexpected downturn in business can leave even the most qualified borrowers unable to repay a loan. With collateral and secured loans, you can boost your chances of getting a loan to grow your business. As an alternative, you can choose from one of the following:1. Invoice financing. The value of your unpaid customer invoices may be enough to secure a loan from some lenders. Unpaid invoices re an option as collateral in invoice financing. Finance companies advance a percentage of each invoice and charge a fee for the service.

    2. Equipment financing. If you plan to use the money from the loan to buy new equipment, you may want to investigate equipment loans options. The equipment acts as collateral or security for the equipment you are financing. The lender can seize your equipment if you default on your loan, but your company shields your personal assets.

    Consult a lending expert in the field to determine which financing option is best for you.

  2. 2.Use a Co-SignerWhen another person agrees to “co-sign” a small business loan agreement, they are essentially taking on some of the responsibility of the loan. Individuals who co-sign on loans are typically financially capable of making the payments if the primary borrower is unable to do so.
  3. 3. Payment History for Less-Than-StellarCredit Be current with your loan payments and reduce or eliminate any late payments. Make sure you make all your payments on time and pay your bills on time. You don’t need perfect credit or even excellent credit; however, you want to clean up your personal credit history to get the lowest rates and access to capital. Check with the credit bureaus for any errors.

What Qualifies as a Poor Credit Rating?

One lender’s definition of poor credit may be another lender’s gold standard. Keep in mind that each lender sets its standards for acceptable credit.

720-850 (Excellent): A credit score in this range indicates that you are a relatively low-risk borrower. Meeting other criteria, such as length of time in business or revenue, a borrower with personal credit scores in this range may be able to pick and choose the best loan for their business.

670-719 (Good): Credit ratings in this range are excellent. With this kind of score, a borrower can expect to have many lending options; however, not nearly as many options if their scores were higher.

620-669 (Fair): These scores pose a greater risk, especially those at the lower end of this range. A small business loan may be possible, but it’s unlikely to come with the best interest rates. Borrowers with credit scores may have difficulty obtaining a traditional bank loan.

500-619 (Poor): To get a loan, a person with a bad credit score needs to meet other minimum requirements. Annual percentage rates are likely to be high because of a lack of funding options.

Below 500 (Very Poor): A business owner’s chances of getting a business loan with a credit check are slim but not impossible if they have this credit score.

What About Bankruptcy?

Having a bankruptcy on your credit reports is a red flag, so ask the lender about their policy on bankruptcy. Bankruptcies must be discharged or dismissed in most cases, and some may require that it has been at least 1-2 years since the filing.

What About Judgments Or Liens?

A judgment against you or a lien against your property may block you from securing a business loan. It depends on the age of the debt and the date of the judgment. The statute of limitations may also apply.

Banks and credit unions will not consider a loan with liens exceeding $200K, but Sunwise Capital will (if you have a payment plan). You may not need a written payment plan for smaller liens.

Bad Credit Business Loans

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Financing Options For People With Bad Credit

Several types of business loans and financing don’t require a high credit score or don’t require a credit check at all. Consider these options if your personal credit rating is low:

Microlenders

When it comes to helping small businesses, microlenders are often non-profit organizations. These short-term loans are from a few hundred dollars to several thousand and are a perfect startup business loan. The Small Business Administration Microloan Program has a $50,000 maximum loan amount, and this financial product is an excellent option for startups.

Line of Credit

Another business loan option is a line of credit. If you have an acceptable credit score, it allows a borrower to obtain credit up to a predetermined credit limit.

As you repay it, those funds will become available again. A line of credit is one of the most popular short-term small business financing types.

Many owners use it for working capital and cash flow.

Banks and credit unions typically have strict eligibility requirements for lines of credit. Still, online lenders may be able to provide lines of credit to applicants with scores that are lower if the business meets other criteria.

Business Cash Advances (MCA)

To determine how much money to lend to a business, a business cash advance lender or merchant cash advance lender analyzes the company’s past sales (revenue). The lender deducts payments from subsequent sales, typically daily or weekly, based on future credit card sales. This loan type uses factor rates.

Credit scores are less critical when applying for this type of financing; however, the volume of sales is. You may be subject to a personal credit check, but the minimum credit score requirements are usually low. This business funding is perfect for prospective borrowers with a limited credit history or bad-credit applicants.

Crowdfunding

Crowdfunding platforms make it possible for businesses to raise money from people who want to support them. Kickstarter and other reward-based crowdfunding platforms allow companies to reward backers with tangible rewards (often in the form of the product). Debt-based and equity-based crowdfunding are two types that will enable businesses to raise money by offering equity in exchange for loans.

Credit checks are rarely required, and there are no minimum credit scores to be met. In most cases, the crowdfunding platform will do a credit check, usually for debt-based crowdfunding. Sometimes, the credit check will rule out open bankruptcy or other serious credit issues.

It’s also worth noting that crowdfunding is a great loan option for new businesses.

What Credit Rating Do You Need For An SBA Loan Approval?

Believe it or not, you do not need a specific credit score to be eligible for an SBA loan. On the other hand, lenders who offer SBA loans may require a minimum credit score.

These numbers are typically between 640 and 680 or higher. Your chances of getting this type of loan increase if you have a high score.

What Can I Do If I’m Denied A Traditional Loan Because Of My Poor Credit History?

If a bank or traditional financial institution rejected your loan application for a traditional business loan, you might want to apply with a new lender.

Shop around to find a lender that is more open to working with you, as each lender has its own set of requirements and eligibility criteria. Other types of business financing, such as invoice factoring, accounts receivable factoring, and merchant cash advances, should also be considered because they are less reliant on credit.

Best Bad Credit Business Loans From Sunwise Capital

It may be challenging for small business owners with poor credit to secure a small business loan, but options are available.

You can get a small business loan even if you have a poor credit history. Bad credit business loans are no problem for Sunwise Capital. Even though you’ll have to pay more for the loan, we’ll still lend to your business if you can afford to repay it.

Automatic daily or weekly repayments are available for terms ranging from six to eighteen months on our working capital loans. Factor rates, are decimal figures rather than percentages, are used to express interest; our factor rates begin at 1.15 percent.

To calculate the cost of your loan, multiply your factor rate by your loan amount.

Our application process is fast, free, and a soft credit pull. Checking eligibility will not affect your credit score.

Within 24 hours, we’ll provide you with the best working capital available with same-day or next-day funding.

You can apply right now.

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