Getting an SBA Loan With Bad Credit
The reason many small businesses are not able to receive an SBA loan is due to a low credit score, which is considered as a score between below 619 according to privacy guard. This creates a tricky situation for companies that in fact do have a lower credit score, some due to the financial crisis from several years ago. The majority of small businesses in the United States turn to traditional banks for obtaining a small business loan or occasionally a business line of credit from a lender. An increasingly lower number of these requests are approved by banks due to credit score requirements. Fortunately, this does not mean that obtaining financing for a business with a low credit score is impossible. The growth and expansion of small businesses across the United States are pertinent to the increase in jobs and steady economy.
There are several options for obtaining funds when the credit score is stopping your business from pursuing more traditional SBA loans. Alternative lenders online often provide the most options to businesses that struggle to obtain traditional financing for several reasons. Through some quick research, you will find that online lenders such as Kabbage, Fundbox, or Street Shares are willing to work with businesses that either has a credit score as low as 500 or in certain situations do not require any credit score qualifications be met. Whether you decide to open a line of credit for your business and pay them back based on future credit sales or find a loan that adequately suits your needs, it is important to communicate your needs to your lender as each loan comes with different repayment plans and structures.
Lenders also take into account the amount of time you have been in business, your personal credit score along with those of your business partners, bank deposit history, and credit card sales. These are all alternative factors that could allow your small business to qualify for a more lucrative loan program. If you are still finding it difficult to qualify for any of these alternative loan options, another method of obtaining those funds would be to take on a business partner as a credit partner in the event you could open up a business credit card, many of which allow up to $50,000 in borrowing amounts. Any of these options come along with their own risks, in any case, please feel free to reach out to one of our specialized financial advisors to assist you with any further decisions regarding your SBA loan.