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New and struggling entrepreneurs frequently ask the unfortunate question, “where can I get a business loan with bad credit?†Unfortunately options are more limited than they were in the more liberal days of the mid-2000’s, but options are still readily available for the highly selective.
Entrepreneurs should avoid big banks entirely. Large banks are extremely unlikely to consider applicants with bad credit. Because their customer base is so large, they find the risk of bad credit customers to be undesirable and often set up very rigid rules and regulations to keep them out. Smaller banks, however, are more likely to value your business and less likely to block you with said rules and regulations. You also have a much better chance of speaking to someone higher up in the decision-making process, which gives your pitch a much better chance of succeeding. Your local credit union is also a good place to go to; in additions to the advantages conferred by small banks, they are also non-profit organizations that don’t have to churn a profit, giving you much more competitive interest rates.
P2P marketing is also an excellent option. Venture capitalists have traditionally been the ideal path for entrepreneurs with good ideas that don’t meet banking regulations, and today, thanks to online P2P markets, it is easier than ever. You can get a wider variety of loans and terms at rates that don’t have to cover the large overhead of banks.
While this answers the question, “where can I get a business loan with bad credit?†there is a way to answer the question, “where can I get a business loan with no credit?†If your business does a reasonable amount of credit card sales, you may qualify for a cash advance. Cash advances are loaned out by merchants to businesses based on anticipated credit card sales. If your business meets a certain monthly minimum requirement of sales, you may qualify for a loan that is not at all based on your credit score.
