It is a common misunderstanding among small business owners that businesses with bad credit problems can’t get easy access to funding programs. However the truth is that businesses with bad credit problems can have access to funding. Actually business loans for bad credit do exist, you just have to know where to go. Bad credit business loans not only can help your business financially, but they also can help you to get your credit score back on the track. FICO, a data analytics company focusing on credit scoring services, defined a credit score of 300 to 600 as a bad credit score.
At present most of the banks and traditional lenders are not willing to lend to a bad credit business just to prevent their businesses from getting risks and that is the reason borrowers with bad credit are instantly declined for traditional funding.
How to Improve Credit Score?
Here are some tips that will help you to improve your credit score;
- Know Your Credit Score
If you’ve got a rejection on your loan request, the first thing that you need to examine is your credit report. Most of the times, some sort of wrong information or spelling mistakes on your credit report can get you rejection. If that is your case, fix these errors first. Contact the credit bureaus and ask them to correct the information.
- Take Control of Your Debt
Frequently people end up with bad credit problems just because they have debt spiral unchecked. Therefore it is advised to create a plan that will help you to deal with your existing debts. Payoff your existing debt and start with the smaller amounts of debt. This approach will help you to remove the negative marks from your credit report.
- Reveal That Your Business Is Financially Strong
Having financial problems in the past doesn’t mean that you can’t get funding currently. If you have resolved those financial problems, reveal to your lender that you have a full control over your financials at present.
- Get the Help of Credit Repair Agency
Luckily there are some credit repair agencies out there helping people to improve their credit scores. These credit repair agencies will evaluate your credit history just to find out any glitches that you can fix. Additionally they will work with you to remove the erroneous information from your credit report.
- Offer an Asset as Security on the Loan
There are also some lenders that provide funding based on collateral. The collateral works as a security on the borrowed amount. If a bad credit borrower fail to repay the loan amount, the lender have the rights to take back the collateral. Due to the collateral involvement, this type of funding is called secured business funding
The Role of Alternative Lenders in Bad Credit Funding
Alternative lenders offer different type of alternative business financing solutions that is not provided by the traditional lenders. If you are rejected from getting traditional bad credit business loan, you can give them a try. Here are some of the alternative bad credit business loans;
Bad Credit Business Loans
These alternative loans are especially made to help bad credit business owners to bridge the funding gap. Not matter what your credit score is, you can acquire a bad credit business loan effortlessly. Furthermore this type of loans help provide you a chance to improve your credit score by making timely payments.
Working Capital Loans
Business that are experiencing cash flow problems and their bad credit condition is stopping them to get funding to cover this problem, working capital loans for bad credit can help. With these loans, you can cover all your short term cash flow related issues.
Businesses with bad credit can also take the equipment loans to purchase the required equipment. These loans help provide the funding to purchase the required equipment they need to augment their production cycle.
Merchant Cash Advance
Merchant cash advances are not loans actually they offer an advance amount from your credit/debit card sales. There no credit check feature makes them the best funding solution for businesses with bad credit problems. Merchant cash advance can be used for purchase inventory, technology upgrade, equipment purchase, as well as business expansion and renovation purposes.
Business Lines of Credit
Business lines of credit can help bad credit businesses to draw a line from their receivables and use it as funding for their businesses. This type of financing comes in two types, long-term business lines of credit and short-term lines of credit. Short-term business lines of credit are the best funding solution for bad credit borrowers.
If you are a small business owner and looking to fund your bad credit business, these bad credit business loans can help you. For more details, please give us a call 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 business loans with bad credit.