Getting a Business Loan with Bad Credit? Here's what to Do
30 Dec 2019
Starting a venture and working towards its progress requires a great amount of zeal and determination. If you are passionate about establishing your own business, you must prepare a well-crafted business plan. Additionally, you would also need to educate yourself about the existing market trends before setting up your business. The world of business can be both compelling and overwhelming. It’s a place where no two workdays are the same, and every day you get to face new challenges and learn from your highs and lows. Therefore, being well-prepared can help you deal with all the situations in a better way.
Once you have the basic idea of your business you need to make sure you are backed up with sufficient funds to get started with your business. However, if you lack funds you can apply for a small business loan. As you likely know, financial liquidity is vital to maintain your business operations. That’s why many businesses opt for additional financing. Unfortunately, if you apply for a loan with bad credit, it can be difficult to secure the financing you require.
But how to get a business loan with bad credit? Well, there are alternative loan options for your business that you can take to get the financing you need.
Ways to get business loan if you have a bad credit score
You can apply for a business credit card
Besides getting a business loan you have the option of getting a business credit card. You can apply for a business credit card with or without an employer identification number, which makes it easier for you no matter what type of businesses you have or want to get started with. However, having a low credit score for business loan means that you’ll receive higher interest rates and lower credit limits on your credit card. Getting a secured credit card is a good option for small businesses struggling with poor credit. Your credit card will be secured with a deposit, that acts as a collateral.
Consider other business funding options
Getting a loan is not the only way to finance your small business. A merchant cash advance is one option you can consider if you accept frequent credit card payments. A merchant cash advance (MCA) isn't really a loan, it is a cash advance based upon the credit card sales deposited in a business merchant’s account. With a cash advance, you will be able to sell a portion of your future credit card earnings in exchange for immediate funds. However, your credit history isn’t that important in the application process, which makes it an ideal option for businesses with bad credit.
Get help from family and friends
Usually, when you need help with finances you tend to look up to your family or friends who can help you out with the money work. As you feel secure and trust them to support you in times of need, especially if you are starting your own business. Well, besides getting a loan you can always get the help of your loved ones as you can get the fund you need almost immediately. Even though this might seem like a safe option, its best to put everything in writing. Having a signed and notarized legal contract will protect both parties. Also, make sure that your relationships with your family and friends can withstand this added dynamic before asking for a loan amount.
Apply for SBA loans
You can avail of benefits from the Small Businesses Administration (SBA) loans. The SBA guarantees a certain portion of the loan, thus making it a lower risk for lenders. Although the businesses that the SBA works with must have exhausted options like bank loans. However, the SBA still requires businesses to have credit scores of around 650 or higher. SBA loans are a great option for a business with bad credit scores.
You can improve your credit and reapply for a business loan
If you are adamant about getting a business loan for your small business then the only option is to improve your credit score and reapply. But how to do that? One way to get it done is by maintaining a good habit of paying off your debt and pay all your future bills on-time. Although this can be tough at the start, it will slowly help you receive a better credit score. To help you create good habits, we suggest you turn on auto-pay for all your electronic bills, you can also get a financial management app that reminds you of your upcoming due dates.
Many business owners struggle to secure loans because of their low credit scores. It’s important to work on improving your credit score. You need to consider all available options so that you are able to receive a loan for your business. Getting a business loan with bad credit isn't easy, but if you do your homework to find the right loan product, you’ll be able to overcome this hurdle too.
You can apply for a business loan at Finserv MARKETS. The loan amount can be used for various purposes such as undertaking various business operations, expansion in the new market, acquisition of other companies, buying high-value and working capital requirements, etc. You can avail a small business loan of up to Rs. 30 lakhs for a repayment tenure ranging from 12-60 months. Moreover, you can customize your business loan to best suit your needs. These customized business loans can give your business the much-needed boost to help your business rise with enhanced competitiveness and profitability.
Bajaj Finserv Business Loan available on Finserv MARKETS are collateral-free, which means you do not have to put your personal or business assets on the line to get the finance for your business. Since you are not required to pledge any collateral, there are no requirements for an appraisal of the value of your assets. You can simply apply for a loan online and get pre-approved offers for an instant loan without security from Finserv MARKETS.
“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”