Bad Credit Small Business Loan Options

bad credit small business loan options

For those with bad credit, seeking a small business loan can be an intimidating concept. However, in order for any small business to succeed, accessing consistent working capital is essential. While traditional business loans often rely on clean credit histories and impeccable finances, there are a variety of alternative funding solutions that are accessible to those with poor credit.


4 Bad Credit Small Business Loan Options to Consider

If you struggle with poor or nonexistent credit, don’t panic. There are a variety of lenders eager to help you get the money your business needs.

1. Online Small Business Loan: Online lenders provide small business loans to entrepreneurs in need of quick cash for their company. Rather than the exhaustive application process that bank loans entail, online loans require a brief questionnaire. These small loans vary in size but average around $30,000. Rather than worrying about credit, these loans link to your bank account, and deduct a previously agreed upon percentage every month. This makes repayment easy, and enables you to repay the loan at a rate that fits your budget. Due to the level of risk that lenders take, these loans often come with high interest rates, which should be considered prior to applying.

2. Government-backed Loan: Some agencies offer government-backed loans that are specifically geared toward providing entrepreneurs of all income levels and backgrounds access to the funding they need. The idea is that through encouraging entrepreneurialism in the U.S., they can boost economic growth and strengthen the economy. The Small Business Administration (SBA) is the largest provider of government-backed loans in the U.S. They are willing to provide loans to small businesses with low credit. To qualify, your business must qualify as being small, it must be based in the U.S., and it must be able to demonstrate sufficient need for a loan.

3. Crowdfunding: Crowdfunding provides a platform for people of all backgrounds and income levels to access the funding they need to launch their business. It enables you to pitch your idea to a wide range of investors and receive micro-loans from countless investors simultaneously. This enables you to receive massive startup funds and market your products simultaneously. The concept relies on pre-selling products. After pitching your idea to the public, those who are eager to test out your product will pre-purchase an item and gain privileged access to the item as soon as it’s released. Since this internet-based platform relies solely on your business proposition, disclosing your finances or credit score is unnecessary.

4. Revenue-based Loan: One of the newer loaning options available, revenue-based loans provide entrepreneurs with the opportunity to access the capital needed to grow their business in exchange for the loan company receiving a percentage of future profits. While this is a more expensive loan option in the long-term, they cater to people with poor credit who may have been denied other loan options. The primary qualifying factor is a strong business plan and a practical method of creating substantial returns. You don’t begin paying off the loan until you’ve already started establishing returns. At that point, you pay a fixed portion of your total sales. This eliminates the stress of repayment, because the amount you pay is always directly correlated to the amount you’re earning, making it nearly impossible to default on your payments.

In order to grow your company, accessing working capital is essential. You need money at every level of business in order to meet consumer demands and remain ahead of your competition. For those with poor credit, accessing loans can seem stressful and hopeless. Fortunately, nowadays many lenders cater specifically to those with low credit scores, enabling you to access the capital needed to grow your company. Take your business to the next level by applying for a business loan. For modern business funding solutions, contact Credibly.