How to Get a Business Loan With Bad Credit

Are Business Loans Hard to Get?

Applying for a business loan can be a tense time, especially if you’re just starting out. If you haven’t had a chance to build a solid credit record, or you have concerns about your current credit file, you may not rate your chances with the bank. It’s true that many banks and traditional lenders will want to see at least two years of promising business operations or a decent amount of collateral before they will even consider you for an SBA-backed loan, because they see you as too much of a risk.

But the good news is that a less than perfect credit history doesn’t rule you out!

How Do You Get A Business Loan With Bad Credit

Sure, most banks and more mainstream lenders won’t look kindly on you. But there is a new breed of lender out there who will take a more personal approach to your specific circumstances and offer a diverse and flexible package of alternative funding opportunities. Innovation, entrepreneurship and thriving businesses are great for all of us, so there is a growing trend for lenders who specialize in supporting startups and small businesses that need a helping hand.

If you’re just getting off the ground, or if you can feel the shadow of bad credit looming over you, this is all the more reason to speak to a specialist about your options for financial support. Getting the right advice can help you to focus your energies on the channels that have the best chance of success for your business, and you can get some tips on how to start building your business credit for the future.

 Can You Build Business Credit Without Personal Credit?

Your business credit and your personal credit aren’t the same thing, and they take different factors into account. It is true, though, that a lender may look at your personal credit as an indication of how much of a risk you might be in terms of owning and running a business.

Business credit might also come into play when you’re being assessed for insurance, lease agreements, or working with vendors and partners, so even if you’re not planning to apply for a loan imminently, it’s a good idea to think about how you can build your credit history.

The bottom line is that you should focus on what you can do to build your business credit, specifically, but don’t let your personal credit count against you.

How Do You Build Credit For A New Business?

If you’re launching a new business, here are three simple things you can put in place today to start building credit for the future:

1.  Continue to do all you can to protect your personal credit rating.

2.  Establish lines of credit with your vendors or suppliers, so that you can show a regular pattern of paying off your balance in a timely manner. This also shows that your suppliers have a level of trust in you.

3.  Get incorporated and apply for a federal Employer Identification Number, so that your business has its own identity that’s separate from you as an individual. This also means opening business bank accounts in the legal name of your registered business.

So if you’re worried about bad credit, don’t count yourself out! There are lots of great, flexible funding opportunities out there that will give you the boost you need and help you to build your credit history for the future. Just make sure that you speak to a loan specialist who is experienced in dealing with startups and small businesses as they will be able to point you towards a solution that’s tailor made for you.

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