Bad Credit Business Loans | Fora Financial

Bad Credit Business Loan

Getting a business loan with bad credit is possible! Find out how.

Bad Credit Business Loan - Green Pig on top of calculator

The Differences Between Personal And Business Credit Scores

Many business owners don’t realize that their business credit and personal credit produce two different scores. Your personal credit score reflects your individual credit, while your business credit score shows how you’re handling your business’s finances.

It is important to note that the scales in which personal and business credit scores are measured differ. Personal scores range from 300 to 850, while business credit scores typically range from 0 to 100. To determine your personal credit score, check out this personal credit score guide. If you need to access your business credit score, you can get a report generated by companies such as Dun and Bradstreet and Equifax.

How to Use a Bad Credit Business Loan:

  • Additional Cash Flow
  • Pay Bills
  • Afford Payroll
  • Repair Equipment
  • Purchase Inventory
  • Pay Overdue Taxes
  • Open Another Location

If you’re in need of additional financing, it is possible to receive a bad credit business loan, despite having a low score. There are alternative lenders who will look at other aspects of your business’s finances, such as time in business, monthly sales, and cash flow. When applying for financing, it is pivotal that you thoroughly research lenders that work with businesses with bad credit, and determine if you meet their qualifications.

Bad Credit Business Loan - Person Reading Papper

Benefits of Receiving a Bad Credit Business Loan:

Build your credit –

By receiving a bad credit business loan and responsibly paying it off, this could help you improve your credit score. This shows that you are able to meet deadlines and are financially reliable.

Receive financing to grow your business –

If you are short on cash, this could affect the future of your business. Luckily, after receiving a bad credit business loan, you can have the financing you need to afford business costs.

Form a relationship with a lender that you can work with again in the future –

If you repay your bad credit business loan, you’ll likely be able to apply for additional financing in the future if you need it.

Questions to Ask About Bad Credit Business Loans:

If you have a low credit score, you should pursue a financing option that will not lower your credit score any further.
Prior to applying for a bad credit business loan, ask yourself and your potential lender the following questions:

Step number 1 icon
How will applying for a business loan affect my credit scores?
If a lender does a hard pull, your credit score could be reduced by 1 to 5 points. In compassion, a soft credit pull will not affect your score.
Step number 2 icon
Do I qualify for a bad credit business loan, or do I need to improve either scores prior to applying?
Before applying for additional financing, you should research lenders that don't have strict credit score requirements. If you are unable to find the right fit, you might be better off focusing on how you can improve your score. At the bottom of this page, you'll find tips on how to do this.
Step number 3
How many times will my credit be ran during the application and funding processes?
Every lender is different. Make sure you ask this question upfront before submitting your application. Some bad credit business loan lenders will do a soft pull to give you an approval, and then a hard pull before they provide you with the loan.
Step number 4
Do I immediately require financing, or could I wait to apply until my score is improved?
Although having business financing can be beneficial, it is important to consider if your needs are immediate, or if you can wait until you raise your credit score.

Quick Tips to Improve Your Credit Scores:

Pay bills on time:

By meeting payment deadlines, you can improve your scores so that they do not get any lower. Plus, this will ensure that you do not rack up additional debt, which will likely negatively impact your business.

Focus on reducing debt:

In addition to meeting future payment deadlines, you should focus on paying off any debt that your business has acquired. This will increase your chances of receiving a loan.

If possible, don’t open new credit card accounts:

When you open a new credit card account, it could affect your credit scores. For the time being, don’t open any new accounts, unless it is necessary.

Check your business and personal credit scores frequently:

Going forward, consistently review your credit scores. That way, if there are any issues, you can handle them immediately.

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