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Alternative Loan Solutions For Small Businesses With Bad Credit Ratings
A common misconception is that business loans are almost impossible to secure when your business’s financial statement projects a bad credit history. While the process may be rigorous there are other forms of loans that are provided by lenders under different conditions. In cases where a business’s credit risk is high, lenders will up the interest rates and other charges to ensure that the loan will not be defaulted on. There are newer lending platforms that approve loans based on the financial projection and progress of a business in the past three years or based on the achievable future projections and solid business plan.
Some of the options for bad credit loans for small businesses are:
Traditional bank loan: Since banks have higher restrictions for approving loans to those businesses with a bad credit, a traditional loan can still be secured if a business is willing to pay higher interest rates or provide a higher range of collateral.
Business credit card: Small businesses can easily secure business credit cards which can help with operational expenses. These credit expenses will be easily manageable if the business can essentially pay up when the funds are available. Getting this form of short loans through credit cards can actually better the credit rating if payments are prompt and without any glitches.
Microloan: This is similar to a tradition loan but the lender source is essentially credit unions. These loans are smaller amounts, usually, opt for those businesses that require less than $50,000. Consequently, the approval process is simpler and the requirements minimal.
Revenue-based loan: These types of loans are approved based on a revenue of about $1000 per year and with a credit score of about 550. A small business that can easily churn our sales revenue would profit from this form of a loan.
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