Starting a business can be a rewarding endeavor, but getting the funding you need to help you strive can be a challenge for someone with poor credit. When searching for bad credit business loans, you will find that there are still avenues available in this trying economy. The key in securing the capital you need as a business owner is knowing which loans are right for you. Even a person with a poor credit history can find a loan to suit their needs.
The first thing you need to understand is that bad credit business loans are not made at the bank. Big banks only lend money to those with premium credit. They very rarely take risks on sub-prime borrowers. Even though these types of loans may not be available to you, it is a good idea to look for ways to increase your borrowing power for future transactions.
One financing opportunity that every business should research is getting your own tax ID number. Having a tax ID separate from your social security number will allow you to build a separate credit score associated with your business. Lenders who supply bad credit business loans will often look at both your business credit score and your personal score and use a combination of the two when approving your loan. Taking this key step in building your company could have a dramatic impact on your ability to secure funding.
Building your business credit history and repairing your personal credit score is more of a long term solution. If you need capital fast, you will need to turn to other sources of lending that will accommodate your poor credit history.
A popular form of small business lending is what is known as a micro loan. These can be found on peer-to-peer lending networks. These online lending networks are comprised of investors willing to take risks on companies with shaky credit histories. Generally the loans are smaller, in the range or $5,000 to $25,000. There are usually credit requirements needed just to join the p2p network. Most networks require you to have a minimum credit score of 620 or higher. You should research the various networks available to see which ones will make a loan to you.
A secured line of credit is another avenue for business owners who have property to use as collateral against their loans. The collateral could come in the form of a house, land, or other property titles. If the value of the collateral is enough, it could be the easiest way to secure a bad credit business loan.
Owning a small business is the dream of many people. The idea of being your own boss is appealing! Access to funding for new small business owners is getting more exclusive every day, but there are options available if you know where to find them. Do not let poor credit get in the way of starting your business. A bad credit business loan can make your dreams reality. With a little patience, your small business dreams can put on the road to financial freedom.
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