You are probably reading this article because you are searching for how to start a new business loan with a bad credit well you are in the right place. Now here are the top three things that you need to know about how to start a new business loan with a bad credit.
Look for Other Types o Financing
First of all, having a bad credit is a major hurdle to obtaining a traditional business loan while there are exceptions your best bet is to start looking into other types of financing factoring merchant cash advances and equipment leasing companies are all much more willing to lend to you. If you have significant equity in real estate then it’s not a problem you can get a private loan using the real estate as collateral and if you have 401k savings you can use that money to invest in your business as well, your credit is not an issue.
Be Current on Your Responsibilities Now
Now another tip I would give you today on how to get a business loan is to make sure that whatever credit issues you’ve had in the past you’re at least current on your responsibilities right now. If you’re currently later behind in your payments, they make it very difficult to get financing and if you do somehow qualify for funding then the rates will be much higher this includes paying off collections if you’re angry with some company and because of that refusing to pay off a collection you’re getting hurt much more than whoever you owe money to. It’s probably time to suck it up and pay that bill, and when you do try to get them to agree in writing to remove it from your report. Once the payment is made before you actually pay the bill they may actually agree to do so before you make the payment but once you actually do it then you have no negotiation leverage. So I would advise you to sign up with a credit repair company right away so you can put yourself in the best position possible.
Build Your Business as Strongly as Possible
Now tip on how to get a business loan is to build your business as strongly as possible without the financing. Specifically, try to file your business taxes leaving significant net profit and avoid writing off a bunch of personal expenses as business expenses. Definitely avoid negative days in your business bank account and don’t bounce payments because lenders will see this. Now one way to get around your bad credit is to bring on a co-signer with great credit and give them majority ownership in the business. If you own 15 percent or less of the business some lenders won’t even check your credit at all and then you can create an option agreement with the other partner so that once the loan is repaid you can buy back the portion of your business at current market value.
Many other people have gone through the same process and if you’re determined there are ways to succeed. Now the reality is that getting a business loan with bad credit can be complicated and you’re going to pay higher rates for your financing, you’re probably best off if you get help from experts you don’t have to feel it alone.