Are you scared to apply for business loans because of your poor credit score? You still have options! Here are 5 business loans for bad credit.
You’ve got a great idea for a business and you’re anxious to get going. Starting a business takes money, though, so where are you going to get the funds?
There are plenty of business loans out there to help you get started, but many of them require the applicant to have a good credit score. So what happens if your credit score is too low?
Before you think your business dreams are dashed, take heart! There are business loans for bad credit applicants. Here are five types of loans you should know about.
First things first, you need to know that there are many types of business loans. One type may meet your needs better than another. Before jumping into a loan, assess your business’ needs and pursue loans that match those needs.
You’re not limited to physical locations when it comes to loans. Consider all your options to make sure you’re getting the best deal. There are even online loans with no credit check!
So what types of loans can you get with poor credit? Let’s take a look.
A line of credit is different than a traditional loan. It gets you the money you need for your business but with convenient, flexible terms.
Kabbage is one company that offers line of credit loans. They don’t require a minimum credit score, so they’re a good option for applicants with bad credit.
How does a line of credit work? You receive the money you need but you don’t just keep paying to get the amount down. You can use the money, then pay it back, then use it again if you need, all without applying again.
This type of loan is great for covering expenses that are a constant need, such as inventory.
Invoice financing is another kind of loan you may not have thought of before. You may be interested in this type of financing if your customers will be other businesses.
How does invoice financing work? Essentially, a financing company will advance you most of the value of the invoice, which means you don’t have to wait around for your customer to pay.
Why is this helpful? Because it keeps money available for you to use for your business.
Once the invoice is paid, you’ll get the remaining amount, minus the fee that’s owed the financing institution. Make sure you look at the fee amount, as it may be more than with other types of loans.
SunWise Capital offers invoice financing for people with poor credit scores. You’ll need at least a score of 550 in order to apply.
If you’ve been in business for a little while, you may be eligible for a business expansion loan. This is a loan that’s specifically offered to help you grow your business.
Getting your business to where you want it to be can really take some cash. If you’re at a point where growth is your goal, or it’s the only option for survival, this type of loan can be very helpful.
People with bad credit can get this type of loan through companies like Credibly. They do require a credit check, but you can qualify with a score as low as 500.
Your business may require equipment to run smoothly. Whether you’re just starting your business or your setup is outdated, an equipment loan can be extremely helpful.
The way an equipment loan works will feel familiar. It’s set up in the traditional borrow-and-pay-back sort of way.
First, you’ll apply for the loan. If you’re approved, you’ll receive the funds and use them to purchase the equipment you need. Then you’ll work on paying the loan back, plus any fees that are part of the loan agreement.
With this type of loan, you won’t fully own your equipment until your loan is paid off. Until that point, the equipment is used as collateral for the loan.
Swiftridge Capital offers equipment financing for people with any credit score. They only financing heavy equipment, though.
Merchant Cash Advances (MCAs) can be obtained by businesses with bad credit. This option should be the lowest on your list, though, because it will likely cost you the most.
MCAs make sure you have the money you need to run your business. You will have to pay fees, though, based on your daily sales.
Luckily, the amount you pay is based on the amount of money you brought in, so you won’t have huge payments when your sales are low. The opposite is true, too.
You can only receive this type of loan if you accept credit card purchases. The amount you pay is calculated from the credit card purchases made each day.
Rapid Advance is one company that offers MCAs. While this can be a helpful source of money, it’s in your best interest to try another option first.
Having bad credit doesn’t stop you from dreaming, and luckily it won’t stop you from starting or growing your business either. Business loans for bad credit can help you get where you want to be.
With any loan, though, make sure you fully understand how the loan works and what all the terms are. Otherwise, you may end up paying more than you thought. As long as you do your research, though, a loan can really help your business thrive!
Are you looking for new ways to bring money to your business? Check out these money-making blog ideas.