Not Impossible: How to Get a Small Business Loan with Bad Credit

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It’s been your dream for years to own your own business. You know if you just had the chance, you’d be a success, but your credit isn’t great because you made mistakes in the past. Don’t let bad credit stand in the way of your dreams.

You can get a small business loan with bad credit if you do the research and follow our tips. You believe in your business idea and now you must convince the bank.

We’ve put together a few ways you can get your business off the ground even if you don’t have perfect credit.

Get a Small Business Loan with Bad Credit with a Stellar Business Plan

How to Get a Small Business Loan with Bad Credit

Since you don’t already own a business, you don’t have a business credit score, so the bank will go off your personal score. If that’s not too good, then prove you have a valid business proposition with an amazing business plan.

A business plan is your blueprint of what your business is and why it’s going to be a success.

It’s more than just a document that goes over the business basics, but also how you plan to pay back the loan, the expected revenue streams, a five-year plan and details and statistics that show your business isn’t just a good bet, but a sure thing.

Work on Your Credit Score

Your credit score is a number that tells the bank how high a risk you are of defaulting on your loan. The lower the score, the higher the risk of default. If you’re willing to wait a little while, then check your credit score and work to improve it.

Many times, people end up with several small sources of credit such as credit cards that become overwhelming.

You can get a consolidation loan that pays off those small credit accounts and makes it one easy to pay monthly loan. You can find out more and choose the perfect loan for your situation.

It not only eliminates credit debt but also helps you improve your credit score when you make the monthly payments on time.

Lower Your Risk with Collateral

Your credit score is only one way to determine risk. You can lower your risk of default with a large down payment or collateral.

The risk lowers because the bank already has a large amount, usually at least 20 percent, so even if you default, they aren’t losing as much.

Research how much money you need to start your business and come up with at least 20 percent in cash. If you own your home or have built up enough equity, then you can use its value as collateral.

If you have a large enough down payment or collateral, then your low credit score isn’t a big problem. The key is to research various loans and determine which ones give you the best interest rate.

Make Your Dream Come True

A small business loan with bad credit isn’t impossible. If you can follow these tips, then you could be a business owner in no time. You deserve to have your dreams come true.

If you want to learn more about owning your own business, then explore our site.

Author: Cathy Carter