The secret of getting ahead in life is getting started. And this is no exception on starting a business as well. Years of planning and preparation, hundreds of discarded ideas and countless number of sleepless nights… all of these go in vain when a budding business idea fails to establish itself due to lack of funding or a strong financial backup. It is rather a shame that brilliant ideas like these never come to light because of a bad credit history. Having a bad credit history or no credit history at all naturally fails to convince traditional lenders such as banks, leading to denial of business loans. Many people make the mistake of investing all their personal savings and investments in their business and only realize that they have put their personal lives into jeopardy when these businesses fail. So is there any option left for these people other than just giving up on their dreams of starting a successful small business? Is there any alternative to improve one’s bad credit history and gain the confidence of money lenders? ‘Yes’ say financial experts. There is always a chance to qualify for small business loans despite having bad credit history, provided all the guidelines mentioned below are followed and hopes are never given up! |
• Before making the lender understand your business, understand it yourself first. Roll out the plans for your project and decide if you are going to be the sole proprietor of your small business or is it going to be a joint venture.
• Create a business plan. How are the profits going to be made and how are you planning to repay the loan? What are the financial requirements of your small business and what are the utilities it needs? Plan everything you need and chuck everything you don’t before quoting your amount. The amount you quote and your credit history should have a reasonable rapport.
• Decide what entity you want to call your business as, a corporation or an LLC (Limited Liability Company). Educate yourself on both the structures and compare their advantages and disadvantages. Take ownership issues, taxing, sharing of profits and repayment into consideration while taking this crucial step.
• Take assistance of people who have experience in getting a small business loan with bad credit before filling out the numerous credit application forms that might seem exhausting to handle all alone.
• Get a tax-ID number and a D-U-N-S number that is very much needed while starting a legitimate business.
• The most important factor while approaching a lender for a small business loan is creating a good impression and showing an improvement in your credit history. Ensure you have a good credit score and there are no unpaid bills or cases of bankruptcy. A good impression is created only when you maintain a good personal image in the society. This assures the lender that you are capable of repaying the loan and wouldn’t just let your business face loss or foreclosures.
• To gain more confidence from the lender, provide collaterals and personal references, which signify that there are alternate ways the lender can expect a repayment from, even if your small business must fail.
The above mentioned points are just a brief on what could be done to successfully qualify for a small business loan despite having a bad credit and is not a comprehensive list. We hope you do more and more research before you apply for the loan and successfully get the approval to start your dream business. All the best!
Business Funding Makeover is a business credit building company that helps small businesses get a corporation or LLC filed and makes them qualified for loans even with bad credit small business loans by helping them build a good credit history. To know more on getting small business loans, visit Wikihow.com.
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