Getting A Business Loan
$20,000 – $350,000
1 – 4 Years
Up to $200,000
Daily, Weekly or Semi-Monthly Payments
$5,000 – $150,000
1 – 3 Years
85% – 95% of Invoice Value
Actual offers vary based on your application information and lender.
Determine Why You Need the Money
There are good and bad reasons for business loans. Good reasons include financing a piece of equipment, real estate, long-term software development or large seasonal sales variances. Bad reasons include financing ongoing losses or acquiring non-essential business assets.
Decide How Much Money the Company Needs
Many small businesses don’t ask for large enough loans. Underestimating the amount of money can lead to a lack of working capital sooner than planned. Conversely, overestimating the amount you need can make lenders question your estimates and credibility. Having a carefully crafted budget supported by reasonable financial projections is advised.
Know How You Stack Up
Lenders look at personal credit scores as a way to judge the reliability of the business owners who are borrowing the money. In addition, they look at the following other factors that you’ll want to know:
Credit score: A credit score of 650 – 700 is generally acceptable, but does not guarantee a loan. Many lenders will look for a credit score that is at least in the 700 – 800 range.
Debt to income ratio: Lenders may look at the business or your personal debt to income ratio (the amount of debt you have as compared to your overall income) to determine your eligibility for a loan.
Time in business: Lenders usually only give unsecured working capital lines and term loans to businesses that are at least one year old and have a reliable record of incoming accounts receivables.
Report on industry risk: Industry risk is rated based on the government SIC codes that are ranked. The less risky the industry, the more likely you are to receive approval.
Report on cash flow: The higher the operating cash margin, the better the chance is for a business to survive slower market conditions and ensure long term survival and growth. In the final analysis, lenders typically make lending decisions based on the company’s cash flow since it measures the ability to successfully repay the loan.
Find a Lender
Business owners have more borrowing options than ever before. Research which type of business lender is the best fit for your business’s needs. Looking for a bit of help? The Business Backer works with you to find the lender that meets your business’s needs. Read below to find out options for businesses with less-than-perfect credit and more about how The Business Backer can help.
Prepare the Loan Application “Package”
The loan package is the paperwork or information submitted in order to apply for a loan. It generally includes:
- A business plan including business owners’ resumes
- Financial results and projections (profit & loss, balance sheet and cash flow statements)
- Personal financial information including three years of tax returns
4 Options for Consumers with Less-Than-Perfect Credit
Having less-than-perfect credit isn’t the end-all, be-all when it comes to business financing. Most businesses have the ability to obtain funding, but may improve their chances with these options:
Because they are typically local establishments, credit unions are often more likely to lend to local small businesses. Credit unions also often specialize in lending to a specific industry, so if you find one within your industry, it may be a good fit.
To serve the increasing amount of business owners turned down by conventional banks, alternative lenders typically offer more flexible options. The application process is typically faster (especially for online alternative lenders), and you’re more likely to receive unsecured business financing through these lenders.
Find a Co-Signer
A co-signer can increase your chances of getting approved for a loan, even if you have a bad credit score. A co-signer is generally someone with a better credit score or higher income who accepts responsibility for your loan in the event that you cannot pay it back.
Come Up With Collateral
You can often get approved for a secured loan when you have less-than-perfect credit if you have property/items/equipment of value that you can put down as collateral.
What Does The Business Backer Provide?
Getting business funding with less-than-perfect credit can feel like fighting an uphill battle. That’s why The Business Backer takes a big picture approach to help entrepreneurs with less-than-perfect credit obtain the funding they need.
Since 2007, we’ve offered advice and customized financing solutions for business owners on every end of the credit spectrum. Our Funding Advisors consult with you one-on-one online or over the phone to evaluate your needs, then help match you with the right product, either directly with us or through our True Relationship Network™ of partners.
Our online application process is fast and simple, and we look at a wide range of factors to get a holistic view of your business before determining your funding options. That way, you’re getting an option that fits your unique business needs. Apply now or speak to a Funding Advisor today!