As a business owner, access to funds is very crucial. Funds don’t come easily. Especially when a pandemic has taken over the whole world.
We’re here to tell you that you are not alone. You are not helpless. Even if you have a bad business credit score, you still have available loan options. You only need to know the right place to look.
Small Business Help During the Pandemic in 2020
Today’s economic picture is not as strong as before. Thus, credit score has become an important factor for determining potential risks while dispersing loans. The last thing any loan company wants is to fund a business that can’t return the money.
Economic struggles have taken a steep rise, compelling small businesses to reduce working hours and others to shut their doors due to the Coronavirus outbreak.
Businesses such as restaurants, barber shops, cafes, and brick and mortar stores are suffering from the impact of social distancing norms implied by the government.
It’s true that businesses are suffering, but there are a couple of things that can help you level out the strain. Decreased cash flow has posed severe threat to many shops.
Applying for a business loan at this point can save you from going under during such times. Quick funding can help you stay afloat and stay up-to-date on your bills.
A loan also helps you maintain your credit score. Businesses in the past have been able to bring themselves out of market depression. It’s time you take the right step.
Is a Business Credit Score Required For Business Loans?
If you run a business and have made any kind of loan transactions, then you have a business credit score (BCS). Your BCS determines your ability to receive loans from banks.
Third-party lenders have relaxed qualifications while sanctioning loans to businesses. If you don’t have a business credit score, you can use your personal credit score to apply for a loan.
A credit score is just one aspect of a loan application. Various factors contribute to the overall evaluation of a loan application.
Loan companies want to see that your revenue is positive and growing consistently. Lastly, you’ll use your revenue to repay your loan. If you show promise, your chances of getting your loan approved increases considerably.
Do you have multiple debt accounts? Is your debt under control? Have your earlier debts been repaid or still on-going? Do you have a good debt-to-income ratio?
Social distancing has tremendously affected cash flow. But don’t worry as it is a global scenario. How you spend your cash is more important. Is it managed well and responsibly? The loan company won’t bother to ask you rigorously about it.
Your business needs to be operational from anywhere between six months to three years, depending on the loan company.
Alternate Ways To Get Business Loans Approved With Bad Credit
Research Your Options
The attributes of a loan include repayment methods, amount, source, and term. Look for a business loan that allows you the flexibility to repay easily. Also, don’t make promises you can’t keep. If a company genuinely wants to help you even after sidelining your credit history, you need to show promise and trust.
Check Your Personal Credit Score
Get copies of your credit report. Check your personal as well as business credit scores. If you encounter any errors in the report, get it amended. Your credit score can help you determine the type of loans for which you’re most likely to qualify.
Maintain a Business Plan
Chalking out a business plan is a great way to put your best version forward. Some lenders ask for a business plan. Even if your lender doesn’t ask for a plan, go ahead and give one. A poor credit score is a result of a multitude of factors, such as poor capital management, late repayment schedules, and so on. Having a business plan stops you from repeating the same mistakes again.
Get a Co-signer
Having a bad credit can demoralize you. If you convince someone to get on board with your loan application, considering they have a good credit score, will help you process the application faster. You and your co-signer must have predefined arrangements in place, agreeing to repay on your behalf in case you aren’t able to arrange for the required funds.
Business Lines of Credit
This allows you access to a pool of funds you can draw from when you need them. Whatever your needs maybe, you can withdraw $5,000 to $1M or more. Repay the amount with interest as per your convenience.
- You only pay interest on funds you draw when required
- You don’t need to submit extra paperwork everytime you withdraw funds
- Most importantly, bad credit is not an approval factor
- Improve your credit score
Short-Term Business Loan
A lump sum amount is granted to you with quick access that you can repay within 18 months. This proves to be a great way to fill in loopholes in your short-term business plans.
- It is flexible financing
- Great way to manage cash flow, pay off debt, and handle sudden challenges
- Set structure for regular payment
- Bad credit is not an approval factor
There’s finally more hope for small businesses struggling to survive this economic slowdown. Whether you’ve previously availed of any loans, have a bad credit score, or no experience in this field at all, there’s always help out there.
If you’re looking for small business loans, Greenpoint Capital is your go-to financing partner. We make business financing simpler and readily available for whenever you need it. We also offer COVID-19 Emergency Loans for businesses in need of urgent funding to help tackle the current situation.