The opportunity clock is ticking and you need funding for your small business, but due to your bad credit condition, you got rejected again and again. Banks consider you as a high risk for lending and are not willing to lend you. You also tried at credit unions, but their lending requirements were not what you can easily fulfill plus their interest rates were so high that you can’t afford to pay back.
You don’t want to miss that business’ growth opportunity, but without getting funding, you can’t make that happen, where you turn to?
Alternative lending is your solution. Currently the alternative lending market takes place through online lending platforms that use technology to bring together small business borrowers who are underserved by the traditional lenders (banks). In 2018, the total transaction value in the alternative lending market is USD 54,704 million with the annual growth rate CAGR 2018-2022 of 18.6% suggesting the total amount of transactions USD 108,223.9 million by the end of 2022.
Know What Your Lender Will Ask For
Alternative lenders are offering business loans to bad credit borrowers at flexible terms and rates. Their lending criteria is somewhat different from traditional way. Getting a bad credit small business loan from alternative lenders requires you to provide a solid business plan, balance sheets, profit and loss statements, your previous debt details, cash flow, bank statements, annual revenue as well as collateral to secure the amount.
Alternative lenders requires you to be in business for at least six months to 2 years with minimum monthly revenue $10,000 or even more.
Get Organized With Your Papers
Before applying for a bad credit small business loan, you need to get organized with your financials and other related paperwork. Every lender requires different set of financial documents, therefore you have to be organized before they ask for some specific document.
Here are some of the documents that alternative lenders will ask for;
- Ownership proof
- Tax returns for both personal and business
- Profit and loss statement
- Bank statements
- Property lease agreement
- Business licenses
- Debt schedule
The first thing that lenders want to see in your loan request is your business plan. They will need to know how you plan to use the money in the growth of your small business and will determine your repayment ability by evaluating your business plan. Your business plan must consist of why you need funding and where you want to invest that amount. Some other details that must be comprised in business plan include, current and projected financials, inflows and outflows of cash, your business description, industry analysis as well as your marketing and promotional strategies.
Collateral & Personal Guarantee
Some lenders require collateral to secure the bad credit small business loans while some require personal guarantee. In case of non-payments, the lender will take the collateral to recover his amount. The same goes with personal guarantee. Therefore it is good to pick and organize the asset that you want to place as collateral to secure the bad credit small business loan. And if you have nothing to place as collateral, there are also some lenders that offer collateral-free bad credit small business loans. They consider some other factors rather than collateral.
If you still have any questions or concerns regarding bad credit small business loans, please call us on our toll free number (833) 827-4412. Alternatively, get your free online quote by filling our online application form, if you’re ready to apply for bad credit business loan.