Bad Credit Business Loans & Financing Options for Growth
We help small business owners with less than perfect credit work with alternative lenders to secure financing.
Bad Credit Business Loans & Financing Options for Growth
We help small business owners with less than perfect credit work with alternative lenders to secure financing.
Intro To Bad Credit Business Loans
Contrary to popular belief, a poor credit score is not always an indicator of irresponsibility. Many hard-working small business owners have poor credit for reasons beyond their control. It’s very common for a business owner to use personal finances to keep a business alive in its early years. And once your credit score takes a big hit, it takes a long time to build it back up. For these reasons, companies like United Capital Source have access to bad credit options for small business financing we like to call Bad Credit Business Loans.
These are the best business loans accessible for business owners with bad credit, but they lack fees and repayment terms that would further endanger your finances. Unlike traditional business loans, business loans for bad credit history are carefully structured so that a small business owner can make loan payments without putting too much cash flow pressure on their small businesses.
Flexible Payments
Automatic payments calculated based on a percentage of the business’ credit card sales or other receivables
Estimated Completion Date**
Payments are based on the business’ receivables so there is no fixed payment term
Cost and Fees
The receivables are purchased at a discounted price and fees may be charged and deducted from the advance amount
**An estimated completion date is calculated based on the estimated time it will take the business to deliver the receivables (which will vary based on the business’ performance). These estimated completion dates typically range between 3 months up to 18 months, but this is only an estimate.
Who Qualifies For Bad Credit Business Loans?
Business credit applicants generally met the following eligibility requirements:
Annual Revenue
$120K+
Credit Score
525+
Time in Business
Over 2 years
Application Process
Choose the Right Product
Gather Your Documents
- Voided business check
- Bank statements (3 Months)
- Credit card processing statements (3 Months)
- Accounts receivable aging report
- Accounts payable report
- Drivers license
Complete Application
Bad Credit Business Funding FAQ
How Bad Is “Bad Credit”?
Bad credit is generally defined as a fico score between 300 and 629. Credit reporting agencies break it down like this:800 plus is an excellent credit rating: You have no late payments or collections on your credit report. You have a long credit history with the credit reporting bureaus and will likely qualify for the lowest rates with any alternative and traditional lenders.
740-799 is a very good credit rating: You have no late payments or collections on your credit report. You likely have a shorter credit history with the rating bureaus and likely qualify for the lowest rates at any traditional lenders and financial institutions.
670-739 is a good credit rating: You don’t have any recent late payments or collections on your report. You should be able to get a business loan with a pretty good rate from most lenders.
580-669 is a fair credit rating: This means you likely have some recent late payments or collections, but not currently. You still should be able to get a pretty good rate with just about any alternative lenders.
300-579 is a very poor credit rating: You struggle with collections and have struggled in the past. Because of your bad personal credit score, you are likely going to have to pay interest at a higher rate. However, some alternative lenders will offer better rates on online loans than others.
What Do Business Lenders Look At Besides Minimum Credit Score?
When underwriters assess business owners with bad credit history, they look at other factors in addition to the minimum credit score to determine their ability to repay. These other factors include:-
Time in business
- Annual revenue
- Cash on hand
- Available collateral
- Industry- Customer invoices
- Accounts receivable
The last point on this list arises from the fact that negative credit may be more prevalent in certain sectors among small enterprises. We may also determine which payback arrangement is optimal for your cash flow based on your industry.
Why Should You Get a Business Loan When You Have Bad Credit?
When you have terrible credit, there are several advantages to receiving a business loan. A few months' worth of payments on a short-term small company loan may drastically improve your business credit score. This is a much more effective and efficient method of addressing earlier credit concerns than having anything erased from your credit report. A past credit problem followed by a paid-off loan is preferable to, well, nothing at all, according to business leaders and possible business partners. You may start afresh payment history when you acquire a business loan. This track record of on-time payments demonstrates that you are no longer a person who skips payments or defaults on debts.
How Important Are Credit Scores In Business Loan Applications?
When conventional lenders assess small company loan applications, they consider several factors. Credit scores, on the other hand, are given particular consideration. (It's worth noting that there are several forms of credit ratings.) FICO scores, established by The Fair Isaac Corporation, are used by many conventional lenders to determine the creditworthiness of personal and commercial borrowers.)
Your credit score is a numerical representation of your likelihood of repaying your small business loans. It's determined by your credit history. Before extending loans to new small enterprises or requiring a personal loan guarantee, lenders look at the personal credit ratings of the proprietors.
Credit reporting agencies calculate credit scores based on what’s known as “The 5 C’s of Credit.” They include
Character – this is based on your credit history of repayment
Capacity – your debt-to-income ratio, or how much debt you carry with regard to your income
Capital – your money – especially the money you and the other owners have already invested in the business
Conditions – the loan’s purpose, the amount of the loan, and the current market or economic conditions, such as interest rates
Collateral – an asset to secure the loan, such as real estate, equipment, or even vehicles
How Do I Improve My Chances of Getting a Business Loan With Bad Credit?
Offer Supporting Documents – Offer assets as security for the loan to increase the chances of receiving a "yes" to a small business loan with a low credit score. This might include selling equipment or your accounts receivable to a factor, invoice financing, or future credit card transactions.
Does a Business Owner Need Collateral?
Most of the products offered by our network of alternative lenders do not need collateral. Small firms with proprietors who have a negative credit history, on the other hand, have business loan conditions that are designed differently. In most circumstances, a company credit card does not need collateral.
Speak with a business advisor
We have a long history of helping small businesses grow their business. We do the heavy lifting, so that you don't have to.
