How to Get a Small Business Loan with Bad Credit

It can be difficult to get a small business loan with bad credit , but it’s not impossible. Here are a few tips on how to get a small business loan with bad credit.

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Check Your Personal Credit Score

One of the first things you should do when you’re looking for a small business loan with bad credit is to check your personal credit score. This will give you an idea of what lenders will see when they check your credit history. You can get a free copy of your credit report from each of the three major credit reporting agencies – Equifax, Experian, and TransUnion – once every 12 months.

You can also check your credit score for free with some personal finance websites and mobile apps, like Credit Sesame and Credit Karma. Keep in mind that these are just estimates of your credit score based on the information in your credit report, so they may not be completely accurate.

If you find that your personal credit score islower than you thought, don’t worry. There are still some options for financing your business, even with bad credit.

Find the Right Lender

There are plenty of small business lenders who are willing to work with you, even if you have bad credit. The key is to find the right one for your needs.

There are two main types of small business lenders: banks and alternative lenders. Banks are typically the most difficult to get approved with, as they have stricter lending requirements. However, they also tend to offer the lowest interest rates.

Alternative lenders are typically more flexible when it comes to credit requirements, but they often charge higher interest rates. However, there are some alternative lenders who specialize in bad credit loans, so it’s worth looking into this option as well.

Once you’ve decided on a type of lender, you can start shopping around for the best deal. Be sure to compare interest rates, fees, and repayment terms before choosing a loan. You can also check out our list of the best small business loans for bad credit to get started.

Get a Secured Loan

If you have bad credit, one option you may be able to explore is getting a secured loan. A secured loan is one in which you put up collateral – typically, something of value that the lender can seize if you don’t repay the loan. The most common type of secured loan is a mortgage, in which your home serves as the collateral. But if you don’t have a home or other property to use as collateral, you may be able to use another asset, such as a car.

Get a Business Credit Card

If you have bad credit, you may still be able to get a business credit card by either finding one that doesn’t require a personal guarantee or by providing a personal guarantee for the business credit card.

A good place to start your search is with business credit cards that don’t require a personal guarantee, such as the Brex Corporate Card for Startups. Some business credit cards will require you to have been in business for at least one year, have a minimum amount of revenue, and/or have a good personal credit score.

If you can’t get approved for a business credit card without a personal guarantee, you may still be able to get approved if you provide a personal guarantee. A personal guarantee means that you are responsible for the debt if your business can’t pay it off.

Consider an SBA Loan

The U.S. Small Business Administration (SBA) is a federal agency that provides support to small businesses and entrepreneurs. One of the ways it does this is by guaranteeing loans for small businesses who might not otherwise be able to get financing.

If you have bad credit, you might still be able to get an SBA-backed loan if you have a strong business plan and collateral (something of value that can be used to secure the loan, such as real estate or equipment). Keep in mind that SBA loans are generally used for larger sums of money than other types of loans, so they might not be an option if you’re looking for a small amount of financing.