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Finding business loans for poor credit customers can be a challenging endeavor in today’s economy. Large banks everywhere expect to see a high credit score and a reasonable amount of assets and experience to meet their loan qualification standards. However, there are still a number of options for entrepreneurs with poor credit to get the loans that they need.
First and foremost, business credit must be separated from personal credit. This requires registration of the business with a federal EIN, incorporation or the formation of a limited liability company, some paperwork, a bank account and telephone line in the business’s name and a file with one or more of the business credit reporting bureaus. This process is necessary to keep your personal credit from being adversely affected by the actions of your business
With this done, let’s look at some of the options. SBA (Small Business Administration) loans are the most common and the most widely available for startup businesses and businesses with poor credit. They exist in a number of forms, with lines of credit typically being the most favorable due to their spending flexibility. Business credit cards are another widely available option that are generally accessible to businesses across the credit platform.
Merchant cash advances are an excellent idea if your business is making excellent credit card sales, but isn’t meeting the asset or longevity criteria for most loans. They also work brilliantly as business loans for poor credit, since the distributing merchants don’t base their cash advances on credit at all; they are based entirely on predicted credit card sales. Provided that you meet a certain monthly minimum, you should be able to qualify for one of these types of loans.
Then of course there is always the wonderful, time-tested method of going to family and friends for business loans. For poor credit businesses, this is sometimes the only option. If this is the route you take, you can use websites like virginmoney.com, which will provide you with the legal and business framework to set up the loan in a professional manner.