Do you ever wonder what defines “good credit” and “bad credit”? If you have bad credit, have you been seeking alternative lending options that are available to you? This article helps to explain the ins-and-outs and your options.
What Your Credit Score Means
720 and above
- Your credit is considered to be A1 credit and you will qualify for just about any small business loan with the lowest interest rates possible.
699 to 680
- Your credit is considered excellent. You may not get the lowest interest rate possible, but you will be approved with a low rate.
679 to 620
- Your credit is considered good credit. You will get approved for most small business loans, with higher interest. Any slip ups and you run the risk of falling into a lower category overnight.
619 to 580
- Your credit is satisfactory. You will have to jump through a few extra hoops to get approvals, but you will find a loan with pretty high interest rates. Paying on time will help to raise your credit score substantially.
579 to 500
- You have bad credit, plain and simple. You may still be able to get a loan, but the interest rates will be almost unbearable. It would be more beneficial to you and your small business to raise your credit score before committing to a loan with extremely high interest rates. This may hurt your company more than it helps.
Business Loan Bad Credit Alternatives
If you have bad credit, but your small business is in need of capital, there are bad credit options for businesses that may be suitable for you. It is not always necessary to obtain your capital from a bank, risking losing your business trying to make the high interest payments. At a time when you are trying to grow your small business, the last thing you need is to go into major debt trying to do it. Here are some alternatives to a traditional small business loan bad credit will not have a negative impact on:
Business Cash Advances
- These are shorter term loans for small businesses in desperate need of business capital, up to $250,000.
- Your credit is based on projected credit card receipts. This type of loan is only available to businesses that actively accept credit cards, and have a high volume of credit card receipts. Start accepting credit cards now.
- If you have a great business idea that shows promise, chances are your loved ones already believe in what you’re doing.
- Write out a professional, but simple business plan. Include a slide show presentation and videos.
- You may be able to find other medium-to-large businesses in your community that invest in local small businesses.
- You will be required to prove that you can pay back the loan, which will probably have a much lower interest rate than a traditional small business loan.
- This is a great option for a small business owner with bad credit and/or no long-term business history.
- They are not as concerned with your past credit history as they are with the profit they stand to make. They base their decision on your company’s story, not a credit report.
Family and Friends
- If you have a great business idea that shows promise, chances are your loved ones already believe in what you’re doing.
- Write out a professional, but simple business plan. Include a slide show presentation and videos.
- You may be able to find other medium-to-large businesses in your community that invest in local small businesses.
- You will be required to prove that you can pay back the loan, which will probably have a much lower interest rate than a traditional small business loan.
- This is a great option for a small business owner with bad credit and/or no long-term business history.
- They are not as concerned with your past credit history as they are with the profit they stand to make. They base their decision on your company’s story, not a credit report.
Community Lenders
- You may be able to find other medium-to-large businesses in your community that invest in local small businesses.
- You will be required to prove that you can pay back the loan, which will probably have a much lower interest rate than a traditional small business loan.
- This is a great option for a small business owner with bad credit and/or no long-term business history.
- They are not as concerned with your past credit history as they are with the profit they stand to make. They base their decision on your company’s story, not a credit report.
Private Business Loan Bad Credit Lenders
- This is a great option for a small business owner with bad credit and/or no long-term business history.
- They are not as concerned with your past credit history as they are with the profit they stand to make. They base their decision on your company’s story, not a credit report.
