Unfortunately, not everyone has good credit. For some people, it can be a challenge to maintain good or excellent credit, which can prevent them from making certain purchases or acquiring a loan.
The same can be applied to small businesses. If you own a small business and look to acquire small business loans but have a bad credit score, you can be rejected for loans from the bank. FICO defines bad credit as a score ranging from 300 to 629.
How do You Get a Business Loan with Bad Credit?
Keeping that in mind, if you are seeking bad credit small business loans, you have options. You can look at alternative lenders instead as they typically concentrate more on the strength of your business than your personal credit score. However, there are certain factors you will want to consider before you choose a small business loan. They are as follows:
• The lower a credit score you maintain, the more likely it is that you will have a higher annual percentage rate. This means your interest rate and all additional fees will be higher, resulting in overall more money to have to repay on the loan
• If your company has any unpaid customer invoices, you are able to immediately obtain cash through invoice financing or factoring
• Consider how quickly you need financing. If you are able to wait a while, you can improve your personal credit score, which means you can also qualify for more and better options on loans
Bad Credit Business Loans
There are a few options for small business owners with bad credit to acquire a loan. It’s important to look into a few options and compare each of them to ensure that you are applying for the best loan for your needs.
Here are a few of the best alternative lenders’ loans and what you can expect from each of them:
- FundBox Invoice Financing: FundBox’s invoice financing is best for small businesses that have unpaid customer invoices. It offers loan amounts ranging from a minimum of $1,000 to a maximum of $100,000. The APR rate ranges from 16.4 to 76.5 percent. There are no requirements for your personal credit score or your business’ annual revenue, but you must be in business at least six months to qualify.
- BlueVine Invoice Financing: BlueVine invoice financing is also best for small businesses with unpaid customer invoices. It offers loans at higher monetary amounts that range from $20,000 to $2 million. The APR rate is between 17 and 60 percent and you have to maintain a personal credit score of at least 530 to qualify for its loan. Your business’ annual revenue must be at least $120,000 and your business is required to have been in operation for at least three months.
- Kabbage: Kabbage is best for small businesses that have short-term working capital. Loan amounts it offers range from as little as $2,000 to as great as $150,000. The APR ranges from 24 to a whopping 99 percent. However, you don’t need a personal credit score to qualify. Your business does, however, need an annual revenue of at least $50,000 and you must have been in business for at least one year.
- Street Shares: Street Shares is best for businesses looking for working capital loans less than $100,000. The minimum loan amount is $2,000 and the APR ranges from nine to 40 percent. You must have a personal credit score of 600, annual revenue of $25,000 and one year of operation under your belt to qualify.
- BlueVine Line of Credit: BlueVine’s line of credit is an excellent option for small businesses that boast strong revenue. Loan amounts range from as little as $5,000 to as much as $100,000. The APR range is anywhere from 16 to 62 percent. In order to qualify for one of these particular bad credit small business loans, you must have a credit score of at least 600. Your business’ annual revenue must be at least $60,000 and your business must have been in operation for at least six months as well.
It is important to keep in mind that, regardless of any other statistics, if your business has very little revenue and has been in operation for less than one year, it will be difficult to secure small business loans from any lender.
Always do your homework when you’re looking for small business loans. You want to ensure that you choose the right lender and the right loan for the needs of your company and that your particular details qualify you for it.