So, you want to expand your business, but you lack the capital. You want to invest in new equipment, but your finances right now are just too tight. Here come business loans to the rescue. But there’s one problem though: your credit score isn’t very desirable.
As an entrepreneur, you probably already how vital credit score is when it comes to unlocking financing opportunities. If you have poor credit, a traditional lender is likely to reject your application. So how do you get that financing you need despite having poor credit? Here are the ways.
Determine your credit scores
Look into your personal and business credit scores and check them thoroughly for accuracy. Study what significantly impacts your score. Are you paying your bills late? Do you max out your credit? Have you opened new lines of credit subsequently in the past? All of these, and more, can impact your score. You may consider improving your credit score first before applying for a loan or find alternative loans that cater to your current credit score.
Provide a business plan
Most lenders require a business plan as part of the loan application process. Even if your lender doesn’t need one, it is wise to have one prepared to demonstrate how committed you are in making this venture work. You may not have the best credit score, but you may be able to convince your lender in approving the loan if they can see that your business is growing.
Seek alternative solutions
Don’t fret if your bank or credit union won’t approve your loan application. There are still other options. Some alternative lenders can provide you a loan despite having poor credit. Also, look borrowing some working capital from a person you know, or taking out a loan from microfinance and peer-to-peer lending.
Don’t let bad credit ruin your opportunities in growing your business. However, you should still strive to improve your credit standing so that you can take advantage of better financing opportunities in the future.