In our recent survey, we have asked many potential small business owners about their business growth plans and many are diving into fulfilling that dream. The most common problems that most small businesses have is their bad personal credit. They asked us this question: Is there any financial assistance available? And if there’s some, how do they go about getting it?
Answer: There are many financial options available, including online lending, grants, microloans, business credit cards, soliciting capital from loved ones and bad credit business loans. But the finest solution of all is one you don’t want to heed: Continue working on your small business, try to improve your personal credit by paying bills credit rating, qualifying for such traditional bank loans timely, keep credit card balances low, open new credit accounts and pay debts instead moving it around. Later, you can think of expanding your business when you will be in a better credit standing.
The lending terms of Government grants are gainful: Small Business Administration is offering loans at lower interest rate and last year the SBA forgo its fees on loan amounts under $150,000. But if your business have a bad personal credit rating, qualifying for such traditional loans are very hard even if your business is well-paying. The reason is that traditional lenders usually require substantial collateral or a personal guarantee from borrowers before approving a loan.
“Many small businesses are struggling to apply for funding when their personal credit goes bad. Most lenders just won’t lend a hand except if a business has a very good credit, and agrees to some other terms,” says Kenneth Riley, CEO of Merchant Advisors.
Merchant Advisors and similar lending platforms are working with small business borrowers that are having bad credit issues, so it’s easy to get a bad credit business loan. But to some, the loan options are likely to be restricted to merchant cash advances, which likely to hold high rates of interest.
They can also be compound for small business borrower. They need to be very cautious about the annual percentage rate calculation. The alternative financing options ought to be considered only when you’ve tired of all other options that won’t abscond your business broke.
You need to hold over your growth plans temporarily, and start researching the market to position your business for expansion. Once you have the capital in hand, you can execute your expansion plans as you may like. During the holdup period, try improving your credit score. Look for ways to improve it or ask credit counseling agency assistance that can help you in improving your credit score.
Start visiting local lender and introduce your small business to them and form solid ongoing relations. They way you can make yourself a good loan candidate for your business loan funding.