Bad Credit? Where To Find Small-Business Loans 2019

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Typically, most entrepreneurs aspiring to start up or boost their business will opt for traditional banks for funding. With a good credit score, there is viable chance you will get the loan but with a poor one it is almost impossible.  These banks will scrutinize your credit history and anyone below 600 score is regarded as a high-risk borrower. Such scores can be attributed to late debt payment and huge debt collections thus affecting your credit report and repelling credit institutions. In the past, being in such a situation would have left you with few to none options. However, today, all is not doom as there are still proven ways you can find that business loan even with a negative lending history. In this regard, we have come up with 6 tested ways to find a business loan in 2019 if you have bad credit.

  1. Peer to peer financing

P2P platforms are marketplaces where borrowers meet lenders. In this case, you join a peer to peer website and make a loan application. The online platforms will review your profile authenticity and give lenders a go ahead to decide whether to award you the loan or not. Loan processing will be faster than traditional banks although the interest rates will be much higher as expected in any alternative lending platform. The two most popular P2P companies you might have a look at are Funding Circle and Lending Club.

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  1. Seek Loan from Relatives and Friends

You might have overlooked this option, but did you know that over 40% of business owners have received business loans from family or friends at some point?  Unlike banks, they will not dwell on your credit score but the will either trust you or believe in your business concept. In this regard, it is important to approach them with a written loan agreement with repayment clauses. It is also imperative to have a clear mind on the compromises you are willing to take, like having them invest in your business rather than handing you the loan.

  1. Micro-lenders and Web –based lenders

If you go on the Google search and hit” online microloans”, there will be a plethora of micro-lenders on the search result willing to lend you a substantial amount of money. The range will be from $5000 to $30,000 depending on different variables. The downside for this is that you will have to contend with high interest rates of up to 25%. In this regard, it is important to factor in the high cost of servicing the loan and its impact on your business. You can also come up with a list of the micro-lenders and compare their terms and conditions such as interest rates, repayment period and loan use limitations. The advantage of this kind of business loan is that making consistent monthly repayments will have a positive impact on your overall credit score.

  1. Merchant Cash Advance

This works well with people who have an existing businesses but have got cash flow problems and low credit score. In this case, the borrower will borrow a certain amount based on the anticipated amount of revenue. Unlike other lending options, you will not be limited on how you can use the loan. However, it is important to understand the high amount of interest that comes with this method, especially if you breach the repayment terms. In fact, statistics have shown that businesses that opt for this method end up repaying over 150% of the money they received in the long run. In this case, it is prudent to have a certain game plan before heading this route.

  1. Crowd Funds

Although not technically a loan, crowdfunding is a great way to get financing even with a poor credit score. It is a proven method where business startups have used to get funding for their business ideas. In this case, if you are a new entrepreneur with a negative credit score but needs money to fund your business, then this is the most ideal route to go. You will receive the funding in exchange for the product sample when it is finished.

  1. Credit Cards

This is not the most ideal idea  to fund your business. However,  if the above options fail , you might consider this method. It involves  taking cash advances  or purchasing business products using  business or personal credit cards. The repayment terms are characterized with monthly payments accompanied by high interest rates. The flipside  for this will be high balances on your card if you fail to follow the repayment plans.  The merit of this method is the improved credit score for having on-time payments.

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