Published By Faith Stewart at October 9th, 2018
Imagine being lost in the woods and you need help, fast. You can hear the wild animals all around you. One noise stands out among the rest as something big, bigger than the others, and scarier. You need to get away. A plane, a helicopter, a car, even a motorcycle would do. You just know you need to get away fast. That big guy? The one you know is catching up to you? That is business failure. These are the woods of bad credit, and you need fast business loans, bad credit immune.
Fast business loans are hard to come by, and when you have bad credit, they can seem nearly impossible. There is hope yet. You can escape from the scary wilderness your bad credit has dropped you into. It is going to take a lot of work, but if you move in the right direction you will get out.
While the goal is to never get back into that wilderness again, you have to actually get out of the woods first. That is where fast business loans, bad credit or not, come in.
Sometimes you don’t even know you are in the woods until you need financing and find that you cannot due to bad credit. When it comes to fast business loans, bad credit can be a major issue. Typically, a score of over 700 is good credit, but with a score over 650, you can still find financing. If your credit score is below 650, you may have some problems.
In these cases, you will need to look for alternative lenders to help you out. They can shine a light in the dark woods so you can see the path to the outside world.
If you are a new business owner, you may find that it isn’t so much an issue of bad credit, but rather no business credit. This is easily enough remedied over time, but if you need fast business loans, bad credit or no credit can be a real problem. You don’t have time.
You could try finding financing based on your personal credit. That is, if your personal credit is any good. If it is over 650, you can probably get a credit card that will get you out of the woods and into a setting that is more conducive to business building, if you use it properly.
You may also be able to simply get a personal loan to bail you out, and then work to build business credit going forward.
However, if you are stuck with bad personal credit and bad business credit, you may have to pursue an alternate route. You may not have a clear path out of the woods, which means you are going to have to pull out your machete and make your own.
It sounds brutal, but it may be worth it if it saves your business. What are your options? Essentially, the best option is invoice factoring. This only works if you have a significant amount in open invoices. It is the fastest of all the options other than a friend or family member just handing you cash. You could call this a chainsaw rather than a machete.
Not only is invoice factoring the fastest way to cash, it is also an option that depends very little on your credit, personal or business. In fact, sometimes there isn’t even a minimum credit requirement. They may pull a credit score, but they make decisions based more upon the strength of your invoices.
The lender will gather information to help them determine the likelihood of the invoices being repaid. If they find that the invoices are strong, they will lend money based on the total amount of the invoices minus a premium. The borrower can usually either repay the loan or the lender can keep the invoices and collect from them.
Fundbox offers invoice financing for amounts less than $100,000. There is no minimum credit score, and there are options for a 12- week or 24-week repayment term. They collect 7% on a 12-week repayment and 15.7% on 24-week terms.
If you have a larger amount in open invoices, like up to $5 million, you can get invoice financing from BlueVine. They charge a weekly fee of .5% to 1%, but the fee drops a little if your clients pay their invoices on time.
If you need really fast business loans, bad credit or not, invoice factoring is your best bet. If you have a little more time you could seek out working capital loans from alternative lenders. This is also a good option if you do not have open invoices.
Some alternative lenders pull a credit report, but they have a low minimum score requirement. For example, Fundbox offers working capital loans to businesses that have been in operation for at least 3 months and have at least $50,000 in revenue. They lend amounts up to $100,000, and there is no credit check
Kabbage offers something similar if you have been in business for at least 1 year and have $50,000 in revenue. The will lend up to $250,000. There is no minimum credit score here either, but most approvals have over 500. You also have to have either a business checking account or use and online payment platform.
Quarterspot will lend up to $250,000 if you have been in business for at least one year and have at least $200,000 in annual revenue. They will do a soft credit pull, but it does not affect your credit. The minimum score is 550.
Once you find your chainsaw, machete, butcher knife, or whatever it may be, turn on your light and get the heck out of the woods. Be forewarned, if you handle things incorrectly you could end up in much worse trouble that you are already in. That is where that light comes in. That is the light of using your credit wisely.
Without that light, you can end up going around in circles, or worse yet, falling off a cliff. Make certain you use the financing the way you need to, but that you also pay it back in a consistent and timely manner.
The way you do this is by establishing and building strong business credit. Not only will this keep you out of the woods, but it can turn that same wilderness into a beautiful park. You may even be able to frolic through it.
Here is how you start.
Your business has to have its own identity, apart from yours, if it is going to have its own credit score. The first step in this process is to incorporate your business. You can also choose to simply operate under a DBA, but incorporating has other benefits that may be worth it.
For the purposes of a separate identity, a DBA with suffice.
Then list your business in all the directories with its own name and contact information. After that, open a business bank account. Run all your business transactions through this account, so that business finances are separate. Pay bills, make purchases, and apply for credit using this account.
After your business has an identity all its own, it is all up to how well you manage whatever credit you can get. If you were able to find those fast business loan, bad credit or not, then you have something to work with.
Make those payments on time, consistently. You might also consider looking into vendors that will allow you pay invoices net 30. This vendor credit tier of starter credit has a lot to offer. Sometimes you will have to prepay for a certain amount of time to get approval. If they give you 30 days to pay an invoice and report to the credit bureaus, this can fast track your credit score. That’s assuming you pay on time of course.
To be fair, you could get lost in the woods of business woes with or without bad credit. Things happen. The key is to have your machete, or chainsaw, with you at all times. Then, if you get lost, you don’t have to worry about fast business loans bad credit. You can simply whip out what you already have and clear a path asap.
What does this look like? Once you have a strong business credit score, you can apply for a business line of credit or a credit card. Find one with the best terms possible, and if it is a credit card, perks and rewards are nice too.
Tools such as these can help you over a rough patch. If you already have them in place, they will not cost you the same way fast business credit loans bad credit will. Bad credit can mean higher interest rates, seriously unfavorable terms, and much more. If you already have credit in place, you can simply access that and enjoy the terms and rates your good credit warrants you.
Bad credit or no credit doesn’t have to be the end of your business story. There are options for financing without great credit. Once you find the option that works for you, the real hard part begins. This is when you have to figure out how to best use the money to move you into a better place. You must be sure to use the debt to build stronger credit. Handle it wisely and do not slip into the cycle of non-payment and further credit score trouble. If you can do that, you can be out of the woods and back on the path to success before you know it.
Learn more here and get started toward getting fast business loans: bad credit has nothing on you!