where can i get a loan for a small business | law fundix

How to Get a Business Startup Loan When You Have Bad Credit

You know I once had really bad credit? Bankruptcy, judgments, late payments—you name it, it was on my credit report. Guess what? I still managed to start a successful business with bad credit, and so can you. So I am going to walk you through the steps on just how to secure a business startup loan, even if your credit is lousy.

The Freedom of Owning a Business

Start your own business, and it will change your life. The ability of unlimited potential income rests in your very own two hands. You can work whatever hours you feel like, decide on closing or opening, and, overall, control just how much you make. With your own business, you have the liberty of expanding on your income through investment in marketing and new products.

This isn't the situation, of course, if you're working for somebody else, since most likely your income is capped at least to a certain degree by a salary or by an hourly rate at which you're paid. But your own business? Potentially unlimited.

The Downside of Poor Credit

Bad credit is a rough way to have your living expenses jacked up very quickly. High interest rates translate into large monthly payments, and banks will charge higher fees if they approve you at all. For instance, with a bad credit score, you might end up paying thousands more than if your credit rating were sterling in the course of a loan. But don't worry—there are ways to get around bad credit and even improve it while building your business.

Applying for a Small Business Loan with Poor Personal Credit

1. Legitimize Your Business

Firstly, law fundix visitors You make sure that you're fully structuring your business.

Form your business as an LLC, S-Corp, or C-Corp and obtain an EIN. A professional website, email address, and number are going to be vital if you are going to build business credit that is separate from personal credit.

After the business is established, you can start building business credit. When your business enjoys a strong credit profile, you can secure loans in its name entirely apart from your personal credit score. That means though your personal credit may be bad, you will still get funding for your business.

2. Take Business Loans to Build Personal Credit

Here's one small secret: You can effectively boost your personal credit score through paying off business loans. For example, if you owe high-interest debt, repaying with a business loan will automatically decrease personal credit utilization, which, in the long run, will increase your credit score.

Where can i get a loan for a small business?

1. Accion

Accion is another nonprofit alternative lender, which tries to get financing to startups, entrepreneurs, and underrepresented constituencies. Their loans even extend to those with bad credit and take personal items—as in people's cars or electronics—as collateral. That makes them a great bet if you're being turned down for loans by traditional banks.

2. Hello Alice

Hello Alice is another amazing resource for business owners that connects you with both lenders willing to fund a start up and grants that you don't have to pay back. One of my students received over $90,000 in grants from them, so they are definitely worth looking into.

3. Credit Unions

You can also try credit unions, which are extremely lenient with some bad personal credit. Since they are more member-driven, they may have more flexibility in their lending. If you have been with them for some time or joined through a family member, they may be more inclined to approve your loan application despite less-than-perfect credit.

Repair Your Personal Credit

You don't have to live with bad credit forever. You can easily and inexpensively restore your credit the moment you approach a credit restoration service, such as Creative Credit Solutions. My friend Justin Marchs, from Creative Credit Solutions, helped me fix my credit, and he is willing to help you.

Final Thoughts

I want to make sure that you have all the right tools, resources, and knowledge, to actually really have a shot at winning. You can certainly start a business with terrible credit. If you make the necessary steps in getting the funding, you can start while working on improving your credit. Just remember, success is in your reach.

This is Law Fundix, and you are a success.

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