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Small Business Loans for People with Bad Credit

One of the most important things in taking out a small quick loan is your credit score. Lenders will use this as their basis in evaluating how risky it is to let you borrow money. How they asses the risk is by looking at how timely you pay your past loans, if you have any existing loans, or how you handle your bills.

Having a good credit score means you have better options, terms, and a better chance of getting your application approved.

But if you have a bad credit, things might get a little complicated for you. Traditional lenders such as banks may straight up refuse your application. The most common culprits when having a bad credit score are late payments, or not paying your debts at all. Although those are the major factors in your credit score – there are other things that can affect your credit; such as bounced checks, cancelling credit cards that have outstanding balance in them, and not paying utility bills on time. Having these kind of bad records will greatly affect the options that will be presented to you when you’re applying for a payday loan or lenders might put you on a tighter leash.

Things You Can Do and People You Can Approach

  • Online Lenders – Online lenders have changed the norms for loans forever. Online lenders are starting to pop-up because of the ever changing times and to avoid the competition of traditional lenders. Online lenders aren’t so strict with their requirements – provided that you can show them proof of income, then you’ll likely get an online loan.

You can apply for a loan in the comforts of your own home, and the application will only take a few minutes.

  • Credit-Unions – Credit-Unions are a non-profit organization which means they will offer you competitive rates. And not only that, credit-unions are easily accessible to anyone as it’s almost anywhere. Check your local community for any credit-unions.

Credit-Unions are community driven to help those people in the community who are in need. They are more than willing to provide help to those members who are in need despite your credit score.

Credit-Union works by pooling the funds of all the members. And that is why they are strict in repayment terms because other members will want to borrow money as well, but that’s about it. On top of being accessible, they offer low interest rates.

  • Peer-to-peer lenders – Peer-To-Peer lenders removes the middleman and enables you to get your personal loan directly from investors. The process can’t be quite tedious but they are generous with their loans if you are able to convince the investors.

  • Have a co-signer – Now this one can be quite hard but if you have one – will almost guarantee the approval of your loan. A co-signer will act as a safety net for the lenders whenever you fail or default on your loans. The co-signer will be the one shouldering your debt.

When looking for a co-signer, make sure that he/she knows the risks; not just financially but also potentially damaging the co-signers’ credit score.

  • Offer a collateral – One way of improving your chances of getting approved is by giving up a collateral. This will make lenders believe that you are indeed serious in repaying the debt as a collateral can be seized or repossessed if you fail to pay back the loan. A collateral can be anything of monetary value, but the most common ones are cars, home equity, and jewelries.

  • Build your credit – If all else fails and you can’t really get a loan, then maybe it’s time to build your credit back-up. It might take you some time, but it will definitely be worth it. You can start your process by getting a copy of your credit report. See if there are any anomalies that needs or can be corrected.

If you have any existing debts or credit card balance, pay them off. Making a conscious effort to rebuild and correct your credit score is a plus for lenders. Focus on dealing with debts that have high interest rates and start to pay them off as soon as you can.

Having a bad credit doesn’t necessarily mean that you are bad with your finances, but sometimes life deals you a bad hand. There’s no way but up, as cheesy as it may sound. One thing to take note of when applying for a loan is to look for a lender that you can work with. It’s one important aspect that is usually overlooked by others. A good lender will not take advantage of you but instead help you come up with a plan in managing your loans or are helpful in the process making sure that you have the best chance possible in getting approved.