Steps to get a business loan with bad credit
Believe it or not, your personal credit is a big part of the business loan process. Thus, having bad credit can severely limit your chance of getting financing for your company. Whether going through more traditional funding by way of banks or credit unions or working with an online lender, be prepared for the fact that your personal credit will undoubtedly figure into the overall equation.
There is hope, however, even if your personal credit history doesn’t entirely fall into the good or even fair category. There are two things you can do in terms of helping put yourself in the best situation for procuring a necessary business loan.
First Step: Check Into Alternative Lenders
For many companies, their go-to is a traditional financial institution. The problem is, if you have poor or bad credit, odds are they won’t be willing to give you much of a look. Even if you try and get an SBA backed small business loan, with bad personal credit, your chances are very slim of actually qualifying.
At this point, bank lending to small businesses is incredibly stringent. Almost 90% of smaller companies will get rejected for a loan upon applying to a bank. You may have fantastic financial statements, but if your credit score is below 700, they probably won’t even consider your application.
This is where First Union Lending come into play. Credit scores are considered but are not the end all – be all of the application process. Unlike banks, First Union Lending also works much more expediently when it comes to getting you the money you need.
Second Step: Get a Handle on Your Credit
You can check credit for free annually at AnnualcreditReport.com. Not to mention, it’s an excellent idea to stay on top of what’s going on with your credit by signing up for a service such as credit karma. The important thing is to try and work to improve your credit score. Pay bills on time, take out secured credit cards and build from there. There are options available in terms of helping people boost their scores. Also, if your credit score is less than ideal you want to consider some of the bad credit loan programs out there.
So what exactly does your fundability look like? There is no one solid answer. With online lenders especially, programs are very flexible and can be custom tailored to your business needs. At First Union, we look at more than just personal credit. We take the entire picture into account when considering whether or not to fund smaller businesses.
Beyond credit alone we look at how well the business is doing, forecasts for the future, and your overall business plan. Numerous factors go into every decision we make.
If you’d like to learn more about what we may be able to offer you, please don’t hesitate to call us at 863-825-5626. Bad credit doesn’t have to stop your business from growing!