The strict requirements of obtaining a loan from banks and government institutions leave many business owners wondering "How do I get a business loan with bad credit?"
It is completely possible to receive a loan or alternative funding with bad or declining credit, however you can expect higher interest or buy rates due to the higher risk associated with your score. FICO defines a low credit score as 619 to 580 and a poor credit score as 579 to 500.
Before choosing a financing option, consider what you can do to raise your credit score. Be sure all unpaid invoices are collected, make changes to ensure a steady cash flow, or look into improving your personal credit if your business credit is the low number.
Low credit shouldn’t be a detrimental factor in getting your business to its next step. Even loan applicants with steady revenue, strong credit and more collateral seek alternative lending because banks are so particular with their financing.
FundKite understands that a bad credit score could be caused by a number of extraneous reasons. What matters to FundKite when funding businesses with low credit scores is the revenue flow. If your business can show through bank statements and invoices that you can pay back the funding received without defaulting, your business can still get the working capital it needs.
Make sure you have a solid reason why you need the funding, and be prepared for higher rates. Then, once you successfully pay off your first funding deal, your credit score may increase from showing responsibility and reliability with money, and you’ll have a positive relationship with a funder if you ever need more working capital in the future.
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Category: Finding Funding