There are plenty of people who make poor financial choices and then decide at a later time to straighten things out. What’s unfortunate, though, is that by the time they decide to get their financial acts together, their credit scores have plummeted, making it extremely difficult to secure any type of loan, especially a small business loan. On the upside, however, landing a small business loan is a bit easier for those with bad credit than it used to be.
Merchant Cash Advances
For business owners who need a minimal amount of money to start their companies, it can be advantageous to secure a merchant cash advance. Such advances are meant to be taken out on a short-term basis, meaning they should be paid back very quickly; usually within six to 12 months. Acquiring this type of loan can be accomplished regardless of a person’s credit as long as proof of income can be provided. There tends to be about a 48 hour approval process, making such loans all the more auspicious.
As contrary as it may sound, regardless of a person’s past credit, there are many credit card companies out there that are willing to hand out lines of credit, and this especially applies to people who are in need of business loans. These lines of credit generally start out at around $500, but they can exceed upward of $100,000. As with any credit card or loan, it’s imperative not to borrow the funds unless they can be paid back. To apply for business credit cards, a person simply needs to do a quick online search and apply for those cards that have reasonable rates.
As one can imagine, the best way to get money for a business loan is by finding angel investors. These wealthy people agree to put up a predetermined amount of money, and regardless of whether or not the business stays afloat, there is no risk of having to pay back the investors. Essentially, the money is invested without risk. Then again, if the business does find success, these angel investors will want a portion of the profits.
Small Business Loans
Banks that give out small business loans won’t require a person to have excellent credit, but they will want to see that the person is working to improve their credit score. For example, if a person has a credit score of 650, which is a fair rating, the bank will want to see that there have been no missed payments in last one to two years. The bank will also want to see a detailed business plan.
Credit Score: The Higher, The Better
When it comes to securing any loan of any type, the higher the credit score a person has, the better. With a score below 650, a person can bank on not securing any type of reasonable loan. Yes, loans can be acquired, but they will be accompanied with extremely high interest rates. On the other hand, with a score of 650 or higher, rates will be much more feasible; this especially rings true for those with a credit score exceeding 700. The best way to improve one’s credit score is by making all credit card and loan payments on time.