Although there is no official credit score requirement for small business loans, chances are that anything below 600 will make achieving your goal a little more complicated.
That doesn’t mean that it’s impossible to get a small business loan with bad credit.
Instead, you just need to know how to work around that bad score. Here are the keys to getting that loan that your small business needs.
1. Give Your Business Some Time
Lenders look at several options when considering your SBA loan eligibility. One of these things is how long your business has been established.
For example, if your business is fresh-faced and has been operating for a few weeks, it hasn’t proven itself yet. However, a small business that’s been operating for over a year is much more likely to generate revenue and make good use of that loan.
If you can hold out for a few months, you’re much more likely to see an approval.
2. Compare Options
Remember, when researching how to get a small business loan, there’s not just one lender. Traditional banks and financial institutions will offer loans, but there are also lots of online lenders you can go through to make sure you find the right options for you. Some may be more lenient than others.
3. Have the Right Documents
If you show up unprepared, you’re much more likely to be turned down for a business loan.
Make sure you have everything you need when applying. You may not have the perfect credit score, but you should ensure that you have documents to verify your identity, the business, and any tax returns the business has already.
4. Have a Plan
Lenders will often want to see a plan for the business. If you’re winging things, they’re not likely to approve you — especially not with a bad credit score.
Be ready to demonstrate how you intend to use the loan and bring in revenue, as well as general plans for the next few years. This should include a marketing strategy and a full description of your goods and services.
5. Be Open to Different Loans
There are many different types of loans, including:
- A term loan
- A business credit card
- Cash advances
- Financing for equipment or invoices
Some lenders may be willing to offer you one type of loan but not another. If you can be open to the different kinds of loans that work for you, it might help you succeed in getting one.
That Small Business Loan Is Still Possible
Even with a bad credit score, your small business loan is still possible — it just might present some more challenges. Work hard at your business, write out a plan for the future, and make sure you have all the documentation necessary so you can still achieve your goal.