Looking for a small business loan with bad credit? Look no further.

Being a small business owner is no easy feat. With the constant need to improve your business through technology upgrades, payroll processes, hiring new employees, or consolidating existing debts, getting a small business loan with bad credit can seem tedious and out of reach for those with poor credit history.

But, often times, there are alternative solutions for your modern-day problems.

With an alternative funder like Rapid Finance, you’re able to open up a whole new world of possibilities in terms of small business funding. But before you get started, we’ve put together a comprehensive overview of what it takes to receive funding even if your credit isn’t up to par with traditional lenders.

Are small business loans dependent on my credit score?

For small business owners, often times their business is their sole livelihood. Although that seems obvious, bigger corporations often utilize capital from other sources to fund their next upgrades, processes and innovations.

But without access to that external capital, small business owners often times feel constrained by personal credit in order to expand and develop their offerings because of personal credit history. For years they’ve been told that in order to qualify for traditional lending opportunities, they had to meet strict criteria: excellent credit, a high value in available assets and a significant upward trend in revenue in order to qualify for a loan.

That however, is not true.

Because with an alternative funder — like Rapid — your funding options are more bountiful, convenient and quick than most are aware of.

Getting a small business loan with bad credit — things to consider

Before you apply for a small business loan with bad credit, you should consider a few credit-related things before you jump into an application:

  • Your personal payment history
  • Your debt-to-income ratio
  • Multiple hard inquiries in recent months
  • Your credit utilization rate

But when applying for a small business loan with bad credit you should also consider the following:

  • Shorter loan periods
  • Lower funding amounts

Setting yourself up for success

As a small business owner, being cognizant of all the factors that go into financing and business solutions can make all the difference. A general rule of thumb before applying for business financing with bad credit is to follow these steps for success:

  • Check your credit score: being in-tune with your prior history and factors that might negatively affect your score can help level-set what funding options might be available to you
  • Have a business plan ready: knowing where you want to take your business with the small business funding available to you is imperative in securing capital
  • Provide collateral if needed: most traditional lenders require a larger sum of collateral to finance against, but knowing what you have available is helpful in securing funding from any lender
  • Research your options: just knowing what funding is available is half the battle. Understanding what kind of funding options you can choose, like a term loan or line of credit, helps set you and your business up for success

Best small business financing options for bad credit

Even though the common misconception is that most small business owners with bad credit have little business funding options, there are actually quite a few available. Explore the financing solutions below:

  • Business Credit Card: A business credit card can allow you to have the ease of transactional financing wherever you and your business shop. Just be leery of high interest rates or low spending limits, where you might find more options in more conventional funding ways.
  • Term Loan: A term Loan through an alternative funder, like Rapid Finance, allows you the ability to secure capital and then pay it off in set payment amounts and dates for added flexibility.
  • Line of Credit: A line of credit provides small businesses with an easy way to access capital on a need-be basis. Line of credit funding is available to dip into whenever you need it, without providing the recipient with a large portion up front.

There are also other types of small business financing options that might be a great solution for your business if your business accepts credit cards or have outstanding invoices:

  • Merchant Cash Advance: A merchant cash advance (or MCA) allows small business owners to leverage future credit card receivables to acquire capital quickly and conveniently. With varied cash advance amounts and flexible payment options, your business may be funded in as little as one business day.
  • Invoice Factoring: Invoice factoring is like an MCA, except it allows you to leverage your incoming invoices to receive a cash advance upfront. And much like an MCA, it’s quick, convenient, and also offers flexible payment options to offer as much mobility as your business needs.

Choosing the right funder

Securing funding for your small business starts with knowing who to go to. While most owners will target traditional funding options, if you have lesser collateral or unsatisfactory credit, you might want to eye something from an alternative funder. Most alternative funders provide you with the ability to receive funding in various forms, , based on your business needs. They typically require less collateral, have a simpler application process and can be offered to those who have bad credit.

While traditional lenders, like banks and other financial institutions, offer loans and lines of credit to those with satisfactory credit and high collateral amounts to ensure they are able to be paid back. They also take a strict look at profitability and are very strict in who they choose to lend to.

Getting your small business loan with bad credit

Finding small business funding when you have bad credit isn’t as hard as you’d think. The process is simple, convenient and quick. To get started:

  • Fill out an application online, including all necessary identification and income verification items
  • Let us review with our team of highly-qualified business advisors, and if they have any questions they’ll reach out to ensure we are able to fund your business needs in a fast and convenient fashion
  • Lastly, if approved, your business may be funded in as little as one business day — providing your business with working capital to ensure your business can grow and support its daily needs

Improving your credit for the future

Although it can seem like a burden, you can take a few easy steps in building your credit up to ensure your future funding options aren’t limited:

  • Making payments on existing credit on time and consistent with each due date
  • Keeping your utilization rate around 30%
  • Avoiding too many hard inquiries from multiple credit applications
  • Consolidating debt
  • Having too many accounts open at one given time
  • Closing accounts shortly after obtaining them

Your small business financing options overview

The myth that getting a small business loan with bad credit or other types of small business financing is impossible is going out the window — because with the right support and resources behind you, alternative funders will be able to secure capital quickly and conveniently.

Don’t be afraid to ask your business advisors questions and be certain that moving forward with an alternative funder is your best fit by always weighing the pros and the cons. If you have any questions regarding any types of alternative financing, like term loans, lines of credit, merchant cash advances or invoice factoring, call a Rapid Finance business advisor at: (877)-252-0827.