So, how do people get business loans for bad credit? Doing business is not easy. One might have really big dreams of making it big as an entrepreneur and might be just barely making enough each month to cover the expenses. A huge deal of investment goes into it before there are hopes of making any big profits.
In midst of all of this, if you face losses, and previous debts remain unpaid, then the credit scores go down quite a lot. But does that mean that you will not be in a position to get the guaranteed loan ever again?
There are always options left to get business loans for bad credit, but this route can be quite challenging.
How to Get Business Loans for Bad Credit?
Rebuild your credit history
First option, if one has very poor credit history, then it is important to rebuild it. Financers will not finance a company until and unless they see that the business owner is serious about making his payments. This would mean paying previous obligations and also paying any dues in any quarters – be it payment of the employees or the electricity bill of the warehouse. This might not seem like a lot at first, but to a creditor they all add up to one thing, that is, whether you have the desire and the potential to repay your obligations. This also starts boosting up the credit score, even if it is slow. Doing something is a lot more than nothing.
Apart from that, you can also look for financing from private sources and advertising can be a good source of loans. For examples, try to find guaranteed approval sponsors for your company and ask them to sponsor certain aspects. The obvious question would be that why would a big company want to sponsor a business which just might have to future. With proper negotiation, ask them to look upon it as a loan. They sponsor the company for a span of two years, for example, and with the help from their advertising, the company starts doing well.
Once it turns around, you start paying off the amount of sponsorship as the repayment of the loan. The thing is that really big brands might not be interested, but smaller local brands are. They would also look upon it as a chance to showcase their name as well, and it kind of works both ways.
This process can help a business ride over the initial problem and then if they approach a bank, prior financers will be able to see that some other brand had sponsored your business, supported you and made a good deal. This changes the picture a lot and the financers would be more open towards doing business with you. In fact, they might even come up with better interest rates and mode of repayment because they would want you to build your credit history as well, so that once your business becomes firm, you would be doing business with them more often, this time with more money. It is a lot easier said than done and repairing credit can take years, but it can be worked out fine with patience and business loans for bad credits can still be obtained.
Go for a short term guaranteed approval loan
Second option is to go for National Funding’s merchant cash loan advance. This is basically a guaranteed approval cash loan and for short periods for those business owners who need something to mitigate their immediate financial problem that might have arised. However, depending on the nature and the time span, the rate of interest can be somewhat high. Still, it does not require a solid credit history and is counted as one of the best business loans with bad credit in the market.