Do you or your business have bad credit? There are still options for you to raise finance for your business.
Bad credit is defined as when an individual or business is not expected to be able to repay their debt on time or in full based on their previous history with debt.
Every individual or business that has taken out a loan, used a credit card, or paid a bill via installments will have a credit history. This history includes the amount, frequency, and how on time each payment was. It will also include the total borrowing, how long the credit history dates and any credit checks that have been done.
Yes, you can still get a business loan, but the number of lenders available will be more limited. You might also be offered a lower loan amount, shorter terms, or higher interest rates due to the increased risk that the lender is taking on.
While there are fewer options available there are still various types of business loans available to businesses with bad credit.
Different unsecured lenders have different levels of acceptable credit scores, so while some won’t accept businesses with low credit scores or with directors that have low credit scores, there are others that will.
The lenders that do accept it will typically offer worse terms to these applicants and will still require a personal guarantee. If there are multiple directors within a business then using the director with the best personal credit will give an application the best chance of going through.
Secured loans require collateral which could be assets associated with the business (such as a commercial property or machinery) or with the director (such as their home or an additional property they own). This removes some risk for the lender as if the business fails to pay, they can take charge of the assets.
This can be a good option for new starts that haven’t had the chance to build up a trading history or business credit history yet and give them access to money they wouldn’t otherwise get.
A Merchant Cash Advance is a unique type of business loan. There is no fixed repayment amount or time so it can work well for businesses that have struggled to make payments on time in the past.
The amount you can borrow is worked out via your average monthly card takings and you pay back a fixed % of your daily takings, so when you are busy you pay back more and when you are quieter you pay less back.
Because of the nature of this transaction, these lenders have less interest in an individual’s credit and just wants to see trading history on the businesses card terminal over a 3-6 month period, however, Merchant Cash Advance lenders do still take personal guarantees and in some cases, they will want someone else to guarantee the advance if the directors personal credit isn’t good enough or they can’t provide a strong enough guarantee.
Because it will mark your credit history when you apply for a business loan, it is important for businesses or individuals with bad credit to not apply to too many places at once. Lenders will see these applications and assume the applicant is desperate or in too urgent a need for cash. This could lead to outright refusal or worse terms.
With this in mind, it can help to speak to an expert. At Tower Bridge Commercial Solutions, we know what options will be best for you and your business and we know what lenders will be willing to take a look at your situation. You can give us a call on 07507270291 or 07860669935. If you aren’t free to call now you can drop us a message and let us know when is best for you to get started: https://www.businessloans4you.com/#ContactUs