Having a bad credit score can put your business into trouble. It can prevent you from getting a small business loan at the time you need it most. Even if you manage to get the funds, the lender can demand very high-interest rates. This could reduce your earnings and leave you with less money to invest in your business. On the contrary, there are several steps you can take to get out of this situation. Remember, some companies process fast business loans with bad credit.
If you have a bad credit history, then you are in a state of dilemma. Almost all banks provide loans only to borrowers with good credit scores, a permanent job, and the ability to repay the loan on time. The situation is further aggravated by the fact that there is a considerable list of banks and MFIs, as well as small credit organizations. These organizations take advantage of the hopelessness of a desperate borrower and set very high-interest rates. In some cases, these interest rates reach up to 100-300%. The Council-Banker knows very well that such fraudulent banks “without problems” give out a loan to almost everyone in a row. Such banks only ask you for 1 document – your passport.
Consideration Of Bad Credit History
There are several factors that can worsen your credit history to such an extent that you cannot get a loan from reputed banks. These factors play their role to make your credit history worse.
When you have a chance
- Existing arrears currently outstanding.
- The presence of information on regular overdue payments on loans for more than 30 days.
No chance to get a loan from a bank
- Outstanding loans with overdue over 90 days
- The intervention of judicial proceedings and IP in the Federal Bailiff Service
Getting a loan with a bad credit history is not so difficult. In most commercial banks, you can get finance on credit. We have listed the options below to tell you the most simple and legal ways to get a loan, regardless of your credit history.
LENDIO
For a small business, even in developed countries, getting a loan for business development is a big problem. Lendio from the USA offers a tool to solve this complex problem. The vast network of the lenders provides you a business loan with bad credit (with a score as low as 550). This company has created a website where borrowers and lenders find each other. To get a loan, you must go through some stages. All that is required of the client is to answer several questions regarding the business:
- Business scope.
- Profitability and relevant things.
- The estimated amount of credit.
- The purpose of borrowing from the list.
At the end of the procedure, Lendio customers are invited to take advantage of additional services. These services include legal advisors, website specialists, accountants, etc. The company requires these services at the developing stage.
PayPal Working Capital
PayPal Working Capital provided $ 3 billion. The United States has funded more than 115,000 small businesses since its launch in 2013. Along with Amazon Lending and Square Capital, it represents a new generation of small business lenders. PayPal directly relates to the existing customer base to provide fast business financing. Only PayPal customers are eligible to finance the company’s working capital.
Fundbox
Fundbox works great when it comes to financing B2C and B2B enterprises. It requires a 500 FICO credit score. Fundbox lends you 100% of the value of the existing invoice. You can borrow and pay your installment against your loan over 10 or 24 weeks. In case your company does not manage the invoices, Fundbox also provides its customers with a traditional line of credit. In the line of credit, you are not specifically collateral bounded.
Kabbage
Kabbage was founded in 2008 and is based in Atlanta, Georgia. It offers short-term lines of credit of up to $100,000 for up to 12 months. It works online and usually makes decisions within a few minutes. On the other hand, traditional banks can take weeks or months, even with applicants, which they ultimately reject.
Traditional banks have rejected many borrowers. Later, they got finance from Kabbage. However, Kabbage reports that the level of equity on loans is not lower than that of banks.
Guarantor
The first option is very simple. It comes down to providing a surety. Yes, most banks require guarantors, but if this is not required, and you insist on a guarantor, this will reduce the risks of the lender. Thus, your chances of getting a loan will increase significantly. It is easy and legal, and most importantly, it is very simple.
Improve Credit History
The second option can be quite flawed for those who need a large amount. A gradual improvement of credit history will help you regain the confidence of banks. So, you will need to return them in a timely manner. The longer you take to pay, the higher the chances that you will get the next loan under more favorable terms.
You will need to gradually improve your credit history by making planned payments according to the repayment schedule. In addition to banks, you can take loans from microfinance organizations. Here, the probability of receiving money is much higher. In addition, your payments will reflect in the credit history. According to the current legislation, all lenders are required to transfer information about borrowers to the Credit History Bureau.
Mortgage
Loan is risky for those who are not confident to fully repay the loan on time. However, it is an excellent motivator for timely repayment. It is important to note that the value of the collateral must be higher or equivalent to the size of the loan. You can voluntarily declare the desire to provide property as collateral as loan security. So, the bank will provide you with money at a lower percentage and for a longer period. As a pledge, consider the following:
- Residential property.
- Commercial property.
- Movable property.
An important point in the provision of collateral is the fact that for the entire term of the contract, this property must be insured. Many people think that this option is not for them, but it is almost an absolute guarantee for obtaining the cash loan.
How To Get A Loan Legally With A Bad Credit History
There are specialized offices that assist in getting a loan with bad credit. The bottom line is that the legal entity is your guarantor. A guarantee from a legal entity for a bank is an excellent guarantee that minimizes the risks of non-return. The solvency of your company is quite easy to verify, especially if the current account is in the bank where you apply for a loan.
Merge Co-Borrowers
Get the co-borrowers who are looking for a business loan. Usually, they should not be more than three. The advantage, in this case, is that legally co-borrowers bear equal responsibility with the title amount to the bank. This greatly reduces the risk of the lender. Moreover, you can easily use their set-off income to get the maximum loan amount, but do not overdo it. You should plan the schedule for the payment according to your income so that you can easily make payments.
Credit Card
You can try to get a credit card, as the requirements for registration of this product are minimal. However, the interest rate on this product is quite high. However, the presence of a grace period for lending allows you to use money without interest for a certain period. If you do not have time to return the money to the bank, you will have to pay interest. This option enables the businessmen to cover their business expenses, including salaries, if they have seasonal products or services.
Conclusion
I sincerely hope this article would help you. Remember, there is also a detailed description of the most popular loan products in various banks with an indication of the pitfalls. Last but not least, all you have to do is to maintain your credit history. You would fall into many problems if you do not have a sound credit history. Avoid delays in payments and enjoy the full-fledged availability of reputed loans with loyal banks.
