Apr 21 2016
How to get Business loans with bad credit
Business loans with a Bad Credit Score:
There are many people out there who want to start a business but have very less credit scores for getting loans from banks. The banks require people to have a decent credit score so that there is a greater probability of them repaying the principal amount along with the interest rates to the bank. Thus if you have a credit score that does not pertain to the regulations of the bank, you can take a look at other options that can fulfill your needs. In this section we will make a list of all the sources from where you get business loans with bad credit scores.
Getting a business loan with bad credit scores from family and friends:
One of the best way to get a loan is to contact your family members or your friends and pitch an idea for the business you have in mind as well as the funding you will need to back it up. Make sure that you present your plan with utmost interest as well as have a fall back plan so that you can repay their business loan. This is one way you can get a business loan with bad credit scores which will reduce the interest you will have to pay if you accept loans from banks.
Getting a business loan with bad credit scored from micro investors:
There are many micro investors on the internet who provide loans to people with bad credit scores. These money lenders never check the credentials or the past record of the borrowers and neither do they ask for any collateral in exchange. The only downside of this type of loans is that these money lenders create their own policies that you need to adhere to. This is a form of unsecured loans. The interest rates for these loans are high since they provide business loans with bad credit scores to people. Another advantage of these type of loans is that they are sanctioned instantaneously without giving any relevance to documentation. The tenure of these loans are extremely small and you can be assured of a loan that ranges from $5000-$25,000. If you repay the business loans on time, you will have to the opportunity to increase your credit history. This history can thus be used to take bigger loans from banks.
Receiving gifts from family and friends:
If you are in need of money that is not taxable, there are certain loopholes in the system that allows ‘gifts’ to be sent from relatives or friends. Under this section, you will have non-taxable money which you can use to fund your business model.
These are some of the way through which you can get business loans with bad credit scores. You need to understand that these methods will not help you in the long run. You need to build a better credit score so that you can avail higher loan amounts from the bank at a cheaper interest rates.