As you may already know, having an above average credit score is hugely important while operating a small business. This can be more critical if you’re seeking additional working capital, and are planning on getting a small business loan.Having a low credit score could make this a challenge.
Fortunately, it’s not impossible to secure that loan regardless if you have bad credit, and the tips below can help make that happen:
Create a Solid Business Plan
When applying for a small business loan with bad credit, it will be good to have a solid business plan that you can present to your lender.This will surely help to prove to them that you can manage repaying a loan.Be prepared to reveal your monthly sales and hopefully any improvements in your business’s finances.Even with a less than stellar credit score, a lender may be more likely to work with you if you can show an upward movement on your financial growth trajectory.
Work on Your Credit Score
Begin by scanning your business credit report to spot and iron out irregularities, if any.Remember that improving your score can’t be done overnight. You need to shape healthy financial habits and prove this credit bureaus over time. If your need for financing isn’t urgent, you should first concentrate on improving your score, and then apply.
Get a Merchant Cash Advance
Just like a loan, a merchant cash advance is a type of business financing, but it is a totally different product.A cash advance is basically lump sum financing that you repay by giving your provider a portion of your personal credit card sales.In other words, even with bad credit, this product can still be available to you if your credit card sales are consistent.
Be Responsible with Bills
Paying bills late contributes to getting a low credit score, so make sure this becomes a priority from now on.Here are a few ways to help you ensure that your bills are always paid on-time:
Create a monthly calendar reminder: If you always forget to meet bill deadlines, get a calendar with a notification feature so you will be reminded as your due date draws near.
Review your budget: If you’re always missing deadlines because of limited cash availability, refine your budget to make sure that all your expenses are paid when they should be.
Use apps: There are several financial apps out there that you can use to help you manage your bills. They are mostly free but you can get more advanced features for a fee.