Getting financing for a business can seem like an uphill battle, especially when you have a sketchy credit history. Still, there are tons of options for people with poor or no credit available; you simply need to know where to find them. You might also have some misconceptions about credit that are limiting your options. This is why it’s important that you look at all the choices that are open to you, even those you might not think you could qualify for. Here are a few ways that you could secure business financing with no or bad credit history.
Check Lender Requirements Before You Apply
If you want to save yourself the trouble, we suggest that you check the minimum credit requirements for any lender you’re thinking of applying with. Some lenders will be more lenient than others, but as a rule, many will avoid people with a credit score under 500.
If you can’t meet a lender’s minimal threshold, then applying with them will be a waste of time. Instead, you should be working on improving your credit score. Or you could look for a lender with a lower threshold.
Look for Alternative Lenders
We strongly suggest you focus your attention away from traditional institutions, as they’re usually not very fond of small high-risk borrowers. Instead, look at alternative lenders. There are tons of lenders online that will allow you to get fast approval on a loan, and will look at criteria beyond your credit score.
These lenders will often pay more attention to things like cash flow for instance. They will give you a greater chance of getting accepted and will facilitate the whole process for you. They will allow you to get reasonable rates, fast access to cash, and plenty of different options depending on your situation.
Have a Professional Business Plan Drafted
Having a sound business plan could be one of the most underrated tools that you can use to showcase your business and get financing. One of the things that will be particularly attractive to lenders is your monthly sales figures. You also have to be able to show how you could improve these sales. Even if you don’t have a great credit score, investors will be more inclined to finance you if you can show that their investment will translate to actual growth.
Take Steps to Improve Your Credit
However, the most important thing right now should be to fix your credit situation, which is something that most businesses can do. The first thing you can do is actually know what your business credit score is in the first place. Try to get a copy of your credit report, see if there are any discrepancies, and fix them.
Start opening small accounts with merchants and get a secured card for your business. Make sure that you make payments on time, and that they’re reported to business bureaus. Just doing these few things could be enough to increase your credit score and allow you to meet the minimal requirements of more institutions.
If you follow these few simple tips, you’ll be able to increase your chances of getting financing, even with poor credit. Don’t automatically assume that you’ll be rejected, but also take action to make yourself as desirable a candidate as possible to potential lenders.