Your bad credit history doesn’t necessarily have to lead to a dead end for your business. Propel your business forward by choosing a bad credit business loan.
As you already know, when it comes to applying for a business loan, one of the most significant considerations is your company’s credit history. It stands as a loyal index of your firm’s financial performance, indicating how it managed past financial commitments.
In this respect, having negative credit history could often result in having your loan application rejected multiple times. Still, don’t lose heart; your credit doesn’t erase your chances of securing bad credit business loans.
Can I Still Get a Business Loan Even Though I Have Bad Credit?
It’s true that lenders typically assess the personal credit histories of company directors before approving a loan application. What is more, if the business is already established, they will also take into account the credit score and credit file of the firm.
If your credit history features missed or late payments, default listings, various credit enquiries, the odds are that your score will make it challenging for you to obtain a loan. Challenging, yet not impossible – that’s why bad credit business loans were invented.
What Options Do I Have?
As a general rule, traditional banks won’t have an understanding approach if you have bad credit. Nevertheless, alternative financial lenders have more flexible application criteria. You can choose to take out a different type of loan or place your business or a valuable personal asset as collateral.
Secured Bad Credit Business Loans
If you pick a secured bad credit business loan, and you intend to place an asset as collateral, the lender is more likely to approve your application. Here’s what you should know on the topic.
- Assets that qualify as collateral include vehicles, business equipment, property, as well as funds from a savings
- The terms and conditions for secured bad credit business loans differ with different lenders. On that note, it’s best to shop around for the best deal before you select a lender.
- Considering that your application is accompanied by collateral, you will be offered a more competitive interest rate as well as flexible repayment terms.
- If you don’t manage to make repayments, the lender will recoup the asset you placed as security.
Considering the growing number of small and medium businesses in Australia, there has been an increase in the number of alternative lenders that facilitate bad credit business loans. Here are some of the reasons why many Australian entrepreneurs choose alternative lenders over traditional banks:
- They supply a good selection of small, short-term loan services.
- Some alternative lenders don’t require collateral for the amount of the loan.
- The loan terms are tailored to your needs, making them more affordable.
- Bad credit history isn’t the only determining factor, as it is in the case of traditional banks. You need to display that your business has the financial capability to repay the loan.
- Typically, repayments are to be completed within a short timeframe. Responsible borrowers will be compensated with better rates when they apply for another loan.
- The application process is quick and effortless. Most of the time, the application is approved within the same day.
In the event in which you have outstanding invoices that slow down your cash flow, invoice factoring could be an option for your company. This alternative implies selling unpaid invoices in exchange for a fee so that you can receive the outstanding payments quicker. More and more Australian business owners turn to this option because:
- Bad credit isn’t a preliminary factor.
- You aren’t required to place assets as collateral.
- You can have an arrangement with the factoring company.
- You have the alternative of financing either some or all of your invoices.
As you can see, having bad credit doesn’t necessarily block up all your financing options. However, it does pay off to compare your options attentively so that you choose the right loan for your business’ success.
How to Compare Bad Credit Business Loans?
Considering that each financial decision you make is elemental, it’s essential to choose the loan that is best for your requirements.
As a general rule, bad credit business loans vary when it comes to their flexibility. Each offers its repayment terms, top-up options, loan amounts and other features. On that note, ensure that you comprehend your business’ needs before you choose a loan.
Your cash flow estimates should display periods of fluctuations and greater revenue. That should help you to establish the best repayment structure and the loan type that is best suited for your company.
Also assess the loan terms, the eligibility criteria, and the additional features. Don’t hesitate to ask your lender questions, to ensure that you’ve comprehended the terms of the loan before agreeing to them.
Bad credit shouldn’t be the end of your business if you know where to look for bad credit business loans. In this respect, ALC Commercial is a reliable provider of financing for small and medium sized businesses. We understand that each business encounters challenges on their road to success – which is why you can count on us!