When applying for a business loan, your credit score can seem particularly important. So, if you have poor personal credit and have only had your company up and running for a year or so, then your outlook may look bleak.
Well, the good news is that there is still hope for you yet! Sure, you may have to get a little creative with how you borrow the money. However, if you follow the guidelines below, you will know just what to do to get your money.
Identify Your Credit Position
Before you approach a lender, make sure that you have an accurate idea of what your personal credit score looks like. Don’t just assume that it is poor. Ask for a credit report and then check for inconsistencies or inaccuracies. You will be surprised by how often these can occur. If you do notice these, make sure to correct them immediately and hopefully improve your credit score.
In case you have been in business for over a year, then you will be eligible for a business credit score as well. Go ahead and check this and make sure that everything is in order. It is only once you have taken these steps that you should start looking for lenders.
Consider a Different Type of Lender
Most financial institutions steer clear of people with poor credit scores. Thus, you may find it quite difficult to get approved for a loan at a bank or traditional lending institution. Even if they do approve your application, there is a good chance that they will charge you sky high interest rates to offset the risk.
If you don’t want to jump through these hoops, consider using an option such as the Magical Bad Credit Loan Agency instead. These types of lenders specifically deal with people who have poor credit ratings. Thus, not only is your chance of approval much higher, there will be less hassle involved as well.
Apply for a Smaller Loan
Another thing to think about is applying for a smaller loan than you initially intended. Prior to borrowing money, make sure to run your calculations again. Determine the minimum amount that you will need for your business and try to borrow this amount instead.
Now, with poor credit lenders you can find loans in every Alberta city and they will approve most requests. Still, requesting for a lower amount can make your application more appealing. Not to mention, it means that you will have less money to pay back as well, particularly with the added interest rate.
Consider Putting Up Collateral
If you do want to opt for a more traditional lending agency, then you will need to prove to them that you are good for your loan. One of the best ways to do this is to put up collateral. For business purposes, this can include equipment financing or unpaid customer invoices. You can also put up personal assets.
These are the top ways to get a loan for your business even if your credit score is rather poor. All that is left for you to do is to try these tips out for yourself.