6 Types of Small Business Loans for Those with Bad Credit
A business owner should look forward to growing their business. This requires funding which a business owner may not have entirely and thus they may want to choose the option of business loans. However, if your bad credit is holding you back to go the business loan way, you don’t have to worry. You can still get loans. You just have to look around and you’ll see that there are quite a few types of business loans available. You can check them and decide which one suits you the best. Here they are.
1. Bank Loans
You may wonder how a bank can approve a business loan to you if you’ve bad credit. However, getting business loans with bad credit is not totally impossible. But you should be ready to pay an interest with a rate higher than their standard rates and also they may require more collateral than a regular loan recipient.
A microloan is similar to a regular bank loan; however, it is usually lent by alternative lenders such as credit unions. This is actually an easier loan options for those with bad credit since the loan amount, as the name suggests, is small, often 50,000$ or less. Hence their requirements are also less.
3. Fintech Loan
Every day the number of digital and financial technology lenders is growing. For those with bad credit, they actually provide a great way to get cash advance loans. This type of lenders usually have very different requirements to apply and check your business track record as well as financials more than your credit.
Before applying for this type of loan, you should check out the lender’s application requirements, services, track record and customer support to see how they’re doing. You may have to remain in their network to get funding with better terms and higher finances in the long run.
4. Merchant Cash Advance
Merchant cash advance or MCA is actually a cash advance against the credit card sales of your business. Here the lenders check your daily credit card receipts to check if you could repay on time. This option may come with very high interest rates. So, be sure you can repay on time before choosing this option.
5. Home Equity Line of Credit
It goes without saying that this is a highly risky option and applies only to those who have their own houses. You have to put up your house as collateral to get a bank loan.
6. Family and/or Friends
Especially if you’ve a bad credit and you have someone who can fund your business in your family or among friends, acquiring a loan from them can be a good option as they mayn’t give importance to your bad credit as you’re their friend or family.
Thus, you can check out these options and take your business further, eventually to earn a good credit and reputation.