There are bad credit small business loans available in spite of what you may think. Lenders are willing to work with you, especially if you make a considerable effort to prove your willingness and ability to repay the debt. The first step is to make a clear distinction between your personal and your business credit.
You personal history can have a profound effect on your business’s ability to get financing. However, you can take steps to assure that your personal past repayment problems do not hinder your venture’s financing options. This can be a time-consuming process, but well worth the investment.
Consider that no bank will even look at a potential borrower that has a credit score lower than 640. You have to work towards creating a new score for your personal financial health as well as for your business. Bad credit business loans are attainable if you prove that you are diligently working on the problem.
Steps to Getting Bad Credit Small Business Loans
Consider your efforts to getting financing for your business with bad credit as a process that is ongoing. This can be considered to be a monetary diet of sorts. It is necessary to cut out your personal credit history in order to cut out some of the fat. This may be the bulk of your excessive credit problems.
Cut out your unhealthy credit history and replace it with brand new habits that help to rebuild a healthy business financial profile. Ideally, you will work to improve your personal credit in the process as well. Consider this to be your overall financial health plan.
How do you cut out your unhealthy debt history? You can start by creating a new credit history for your business that is completely separate from your personal finances. This is accomplished through incorporating your enterprise.
When you incorporate, you establish your business as a separate entity with a financial profile of its own. Your company will have an Employer Identification Number (EIN) or Tax Identification Number that will be used in place of your Social Security number.
The next step is to build a spotless credit report for your company. Borrow a little at a time, beginning with small advances that you can repay quickly and efficiently. Once a little bit of reliable repayment is accomplished, continue the process.
After awhile, you will be able to successfully be approved for bad credit small business loans. Use the good habits that you are developing in building a great repayment history for your business for your personal finances as well.