Can I Get a Business Loan With Bad Personal Credit?
The answer is yes, but only if you have a very good credit score. Only 21% of Americans have “exceptional” credit scores, which means scores between 800 and 850. If your credit score is over 800, you’re in the best position to qualify for a business loan. Shop around and you’ll probably find a good rate. Otherwise, seek out a term loan from a traditional lender, which will often have lower approval requirements.
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Online lenders may be more willing to work with small-business owners with bad credit
While it is true that getting a business loan is much easier if you have excellent credit, even those with bad personal credit can get approved. You may need to look outside of traditional lenders to find a business loan, but it’s certainly not impossible. Online lenders may be a good option if you’ve had trouble with your personal credit. While most lenders will check your credit report, bad credit doesn’t necessarily rule you out of being approved for funding.
While most traditional lenders base their loan decisions on your personal credit score, they also look at your business’s score. The five C’s of credit – character, capacity, capital, conditions, and collateral – determine your credit score. Depending on the type of business, you may have a lower credit score than you realize. Fortunately, there are several online lenders willing to work with business owners with bad personal credit. The following are just a few of the options available to you.
Nontraditional financing options for small-business owners with bad credit
Small-business loans may not be the best fit for every business. However, if you are new to business, you can consider nontraditional loan products. Companies such as PayPal, Square, and FundThrough offer these types of loans. These loans are issued through private payment processors. To get a loan from these companies, you need to have a certain amount of revenue in order to be approved.
Having bad personal credit may prevent you from getting a loan from a traditional lender. If your personal credit is low or nonexistent, you will have to look for alternative lending options. These lenders are often less stringent and may approve you more quickly. These options can make the process of getting a small business loan much easier for you. Despite the lower credit requirements, these loans may be the best option for you.
Requirements for getting a business loan with bad personal credit
If you have bad personal credit and need a business loan, you can still get it. Generally, you can get a loan with a bad personal credit score, but your options will be fewer. To start, you should identify what you need the money for and then shop around for a lender with less stringent lending requirements. Those with bad personal credit often get a higher interest rate, but they can still find financing.
In addition to reviewing your personal credit score, you should also examine your business’s credit report any discrepancies to the credit bureaus. Building your credit history isn’t an overnight process, and you must establish a good financial history and demonstrate responsibility to the credit bureaus. The process can be lengthy, especially if you need a business loan immediately. But don’t give up hope!