Bad Credit Business Loan Options for New Business Owners

Getting bad credit business loans is something that a lot of businesses have to worry about. There are a number of reasons that your business credit could be lacking. However, even if your credit is bad, you still may need to get a loan at some point. Sometimes it takes a little bit of money to help with cash flow and other needs. Therefore, you have to look at bad credit business loans as an option. Here are a few loan options for businesses with bad credit. 

Private Lending

When your business has bad credit, there is a good chance that they will not be approved by a traditional lender. When this happens, one option that you should strongly consider is private lending. The private lending industry is also sometimes referred to as "hard money lending." Private lenders are typically individuals that have some extra capital that they want to invest. If your business plan sounds good you should be able to find a hard money lender out there that will listen. 

The rates that you can get from a private lender are usually not that desirable. The interest rates are always going to be higher than what you can find at a bank, but when you have few options, this can still be beneficial to you. Private lenders are going to place an emphasis on the quality of the investment and whether or not they can get their money back upon default. The application process will be more relaxed than with a traditional lender and is usually faster. Private lending is often overlooked but it is definitely a viable alternative. 

Peer-to-Peer Business Loans

Peer-to-peer loans are another variation on private lending. With these loans, you typically go to a peer-to-peer website and find another business that wants to loan money. You can put a loan request in and many businesses will see it. If one sees your request and likes it, they can contact you to discuss it more. If both parties agree that it is in their best interests, the peer-to-peer company can set up a loan with a payment plan. The interest rate is agreed upon and the payment calculated. The peer-to-peer company handles deducting the payment from the borrowers account and distributing it to the lender. Usually a fee is involved in the process, but it is typically very reasonable. This can be a great option to go for when your business has less-than-desirable credit to work with.

Merchant Loans

Merchant loans are another option that may be available to you. With a merchant loan, you are given the money you need and then slowly pay it back every time you run a credit card transaction. The merchant loan company comes in and sets up your card terminal so that they are paid a percentage of each sale. Therefore, you do not have a set payment to make and the money slowly gets paid back as you make money. If you are a new business, you may have a hard time finding a lender as they usually like established business. However, if you look hard enough, you may be able to find a merchant lender to work with anyway. 

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