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Certainly federal business grants information is
important to helping you succeed in your business. Here are some
resources to help you along the way:
Obtaining a Poor Credit Business Loan
By Rebecca Game
Business owners with poor credit ratings may find it difficult to obtain a loan for purposes, such as expansion or to invest in a new product. Because lenders focus primarily on personal credit scores for loans, you need to focus your efforts on going to the right lender for a poor credit loan.
Poor credit loans are available to owners who would not otherwise qualify for a conventional loan. Before applying for a lender, take a few important steps to increase your chances of getting a poor credit loan.
1. Write a sound plan.
Having a sound plan is your biggest asset in obtaining a poor credit loan. The plan should be completed and should represent your in detail. Pay the closest attention to your business' summary, which is stated at the beginning of the plan. The summary is generally one to three pages in length, and details your business' management experience, marketing efforts and goals, goals, and other information about the business. If the lender likes what they see in this summary, they'll read on.
2. Rent, rather than purchase, space.
If you're applying for a poor credit loan, look for attractive rental property that fits easily into your business' budget. Lenders favor businesses that rent or plan to rent space rather than purchase a building, especially for businesses that are in the early stages of development, and will often approve poor credit loans provided space is rented rather than purchased. This is due to the fact that lenders prefer to see a owner investing in assets that generate income for the business, such as inventory and equipment. Lenders also frown on expensive renovation costs to rental space if the is a young or start-up business.
3. Review your credit reports.
Checking your credit reports from Experian, Equifax, and Transunion is an important start to the application process for a poor credit loan. Your credit reports can cue you in on what the lender will see as soon as you apply for a poor credit loan. When you obtain copies of your credit reports, review all information, including your name, address, phone number, and social security number to make sure that they're all correct. Additionally, check your listing of creditors.
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If there are listings that you don't recognize, report them to the credit bureau. Additionally, if there are listings that were turned over to a spouse after a divorce, for example, report those as well. The credit bureaus will contact the creditors with these disputes. Creditors are given a 30 day period to respond and verify that the debt is true, or if they are indeed errors, they are required to remove the listings from your reports. If no response is received after you file your dispute, the credit bureau is required by law to remove those listings from your reports. Demand that the credit bureau correct these mistakes promptly.
If your credit report shows legitimate late payments or bankruptcies, include a letter with your poor credit loan application, explaining the circumstances of these marks against you, and how the situation has changed for you. This can greatly reduce the impact of these negative listings. Be honest with the lender! Trying to conceal your past credit problems is the fastest way to get your poor credit loan application discarded.
4. Consider a small lender.
Larger banks aren't necessarily the best place to apply for a poor credit loan, and in fact, can sometimes be the worst place to apply. Smaller banks and credit unions are often more inclined to finance businesses in their community, even those applying for a poor credit loan, and their loan officers are more likely to give you individual attention and listen while you state your case. Each inquiry into your credit report generally reduces your credit scores by five points, so choose your lender carefully before applying for a poor credit loan. Ask the lender to review your situation prior to pulling a credit report. If they feel that the proposal shows great potential, while being honest with them regarding your poor credit, and the lender feels that the loan could be approved, you've reached a safe point to move forward and allow them to request your credit report.
Poor credit loans can sometimes be difficult to obtain, so be resourceful on where you get your loan.
A. Consider a home equity loan.
For example, home equity loans can be used for purposes. However, keep in mind that if the fails, you may also be at risk of losing your home if payments are not made.
B. Consider working with a specialty lender.
Some lenders specialize in poor credit loans for high-risk entrepreneurs. These loans usually have high interest rates, but can sometimes offer a provision for lowering the rate when the shows positive cash flow and the borrower demonstrates the ability to pay the debt.
C. Approach the Small Business Administration.
The Small Business Administration (SBA) has a wide variety of loan programs to assist owners and potential owners. The SBA does not provide loans, but rather, guarantees a loan, reducing the lender's risk of loaning you the money for the poor credit loan. The SBA also maintains a list of business-friendly banks. For more information, contact your local SBA office, or visit sba.gov.
Rebecca Game is the founder of Digital Women ®, an online community for women in business. A 30 year entrepreneur and dedicated to helping other women find small business loans. Visit her site: Loans for Women
www.digital-women.com
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