Small business owners can develop a successful, vibrant organization and still deal with common problems like bad credit and a lack of collateral. Does that mean you secure a business loan with bad credit? While having good credit and collateral on hand can help you secure a loan in some instances, there are established, dependable alternative lenders – like National Funding – that can work with a wide variety of financial situations such as needing a business loan with bad credit.
Securing a Business Loan with Bad Credit
Credit is a long-term situation, and items as old as seven years can have a major impact on your rating. Many times, people and businesses have bad credit because of limited resources, not conscious decisions that lower their scores. Both your personal credit score – calculated on a scale of 300 to 850 – and your business credit score, usually measured from 0 to 100, play a role for small businesses.
Turning the corner financially – by starting a successful small business, for example – doesn’t erase a credit score. You have to contend with your rating until items are resolved or fall off your report. That means complications when seeking loans from traditional lenders, like banks and credit unions. These institutions place significant weight on small business owners’ credit scores when deciding whether to lend money to a given company.
Collateral is a much different subject than a credit score, although its presence or absence has a similar impact on the loan decisions made by banks and credit unions. Some businesses simply have collateral that is easily used to secure a loan, while others don’t. Similarly, some business owners have personal possessions they feel comfortable putting on the line, but others don’t have that luxury.
While the Great Recession is in the rear-view mirror, the impacts of that economic downturn on banks and similar lenders led to the development of more conservative lending practices that continue to this day. Many small businesses that could have secured a loan in the past from traditional lenders cannot any longer.
A lack of collateral and a low credit score can mean extreme difficulty in securing a loan through more traditional means. Instead, your business needs to consider working with a more flexible and responsive alternative lender.
Overcoming these obstacles
Business loans for poor credit aren’t impossible to find. In fact, alternative lending like with National Funding can mean avoiding a number of the frustrations and other issues that arise when dealing with a traditional lender. As opposed to the severe and frequently hidden limitations on lending put in place by banks and credit unions, National Funding offers a clearly visible baseline standard that businesses can use to determine if they can start the process.
Does your business have:
- A full year of operations under its belt?
- At least $100,000 in gross yearly sales?
- Three months’ worth of bank statements?
By meeting these qualifications, your company is starting off on the right foot when applying for a loan through National Funding. You don’t need to worry about the state of your business or personal credit score, nor the availability of qualifying collateral.
Of course, traditional lenders don’t only look at credit scores and collateral when determining creditworthiness. They may also require many months or years of bank statements, tax forms, detailed business plans and other documents that may be difficult to assemble to their exacting standards.
Working with National Funding means avoiding these lengthy, time-consuming and sometimes-painful processes in favor of a more direct approach. You can apply for a small business loans between $5,000 and $500,000 through our easy, no-obligation application process and a decision in as little as 24 hours.