Are you a small business owner and you need fresh cash injection to scale your business? Many business owners lack the cash to sustain their business so they opt for business loans but what if you cannot afford a business loan because of bad credit; what do you do? You can simply apply for business loans for bad credit.
Business Loans for Bad Credit
These types of loans have become hugely popular in recent times because they are mostly unsecured loans. So rather than give up hope of securing a loan, you can approach firms like Booster Financial for small business loans for bad credit.
But before we review bad credit business loans in detail, let us explain why people suffer from bad credit in the first place.
Bad Credit and Its Root Causes
Bad Credit is a situation where a person has borrowed money from more than one credit bureau. What we mean by this is that the person is a debtor to one or more creditors and the debt has lingered on for a very long time. The debt is a compilation of all the approved loans, credit cards, credit card loans, foreclosures, etc recorded in their credit report.
As the debt rises their credit rating sinks up to the point where they can’t qualify for a fresh loan. The reason why a credit rating is important is because this is the information creditors look at to determine who qualifies for a loan and who does not. Anyone with a bad credit is at risk of defaulting should a new loan be given to them so loan companies reject the application by such a person.
If you have a bad credit you will agree that securing a small business loan is difficult or down right impossible. But what are the causes of bad credit? Here are some of them.
Causes of Bad Credit
One of the ways credit card and loan companies calculate credit ratings is to review the payment cycle of the loan applicant. Loan repayment history accounts for about 35% of your overall credit score. So if you have a history of paying your debt late by more than a month, the creditor may have reported your information to the credit bureau which will reflect in your credit report.
Delayed payment will negatively affect your credit report and if this continues for a significant time, coupled with other factors, you may fall into the category of bad credit applicants. This will make it very hard to get an unsecured small business loan.
There are cases where the creditor is unable to collect what is owed; to force the borrower to pay they may contract a third party collector to collect the money on their behalf. This practice is borne out of desperation and is one of the leading causes of bad credit ratings. Debt collection agencies may get the money from you in the end but the activity will be recorded in your credit report which will reflect poorly on future loan applications.
If you file for bankruptcy, this is another major move that can cause you to suffer from bad credit. Filing bankruptcy is an action of last resort by the borrower to get legal protection. It simply means that the person lacks the financial capacity to pay his or her debt. Of all the actions that can trigger a bad credit score, filing for bankruptcy is perhaps the worst of them all.
Once bankruptcy is filed, the information will remain in the person’s record for the next 7 years before it is expunged. Having such information in your record is a red flag for lenders because they fear that the applicant may never be financially solvent again and might default on the new loan yet again.
A charge off is simply a prolonged debt left unpaid and charged off on the creditor’s account. Let us explain what we mean. After demanding a dent payment for so long to no avail, a creditor may charge the debt to an account called a charge off account. This action simply means that the debt can no longer be collected and the Creditor has written it as a loss.
On the surface, this may seem like good news on the part of the debtor but it is not. Charge-offs leave a black mark on credit score research sheets. In the case of a service, the debtor will be blocked from making purchases with that account; for loans, the debtor will no longer be able to access any kind of credit or loan facility issued by the loan or credit card company. Charge offs are reported to the Credit bureau and cause your score to drop significantly. Also, just like bankruptcy filings, charge offs remain on credit score reports for another 7 years before it is cleared off.
Another cause of bad credit is loan default. A customer or borrower is said to have defaulted on a loan if he is unwilling or unable to repay the loan at the agreed period. Loan defaults occur the moment the borrower misses at least one repayment cycle. In his or her credit report, the loan will be marked as default and has damaging consequences. Loan applicants with a history of loan defaults are viewed as high risk applicants.
Note: There are a host of reasons besides the ones listed above that affect the credit scores of many and cause them to suffer bad credit. The kens listed above are the common ones. No matter how bad your credit score may be, let your mind be at rest because there are bad credit loan companies that offer business owners like you q bailout.
What Is a Bad Credit Loan?
A Bad Credit Loan is a special kind of loan issued to people who have poor credit ratings. Loan providers that offer small business loans for bad credit are fewer than those that offer normal business loans. This is because such loans are high risk because the borrower may default on the loan leading to potential loans.
Lenders like Booster Financial offer business loans for bad credit to applicants that would ordinarily not get loans from anywhere else. Bad credit loans are unsecured loans that provide borrowers access to the cash they need to fund their business. Such loans are given to people with poor credit scores as long as they meet certain conditions.
What Is a Bad Credit Loan?
Yes, most business loans for bad credit are unsecured loans but there are secured variations to this type of loan.
An unsecured loan is any type of loan that doesn’t require collateral. This loan is issued on the basis of the borrower’s ability to pay back and not any asset. Many students and businesses rely on unsecured loans for lack of assets.
A secured loan is a loan that requires the provision of assets as collateral. The value of this type of loan is tied to the collateralized asset. If the borrower defaults the lender has a legal claim over the asset. Furthermore, in most cases, the collateralized asset has to be worth the loan amount the buyer is applying for.
Note: A small business loan for bad credit can be secured or unsecured depending on the policy of the lender. Before you apply for any loan, make sure you read the terms and conditions before applying. Consult customer service if there are any gray areas you don’t understand.
What Are the Features of Business Loans for Bad Credit?
Bad credit business loans are uniquely different from other types of loans. Here are the key features you should know of.
Low Credit Scores
This loan is only issued to people who have low credit scores, not people with big scores. A low credit score is any score of 500 and below. People in this category have charge offs and loan default history on their credit score cards. They may also have filed for bankruptcy in the past.
High Interest Rate
Business Loans for bad credit attract high interest rates compared to other types of loans. This is because of the high risk possibility of default so lenders prefer to charge interests to measure the risks. In case the borrower defaults the lender would have collected a significant sum within a short period to offset any potential loss.
Fast Online Application
Bad credit business loan providers like Booster Financial have online portals for applicants to apply for any of their credit loan facilities. You can secure a loan within the shortest possible time by filing an online application form. The entire process from loan application to cash disbursement is done online. This means that you don’t have to make long trips to the offices of the loan company to apply for it.
Another feature of small business loans for bad credit is the fast payout. Lenders know that borrowers who come to them for such emergency funds are on borrowed time so they expedite the process. Once your application is approved and you sign and submit the relevant documents the loan will be disbursed to you in a matter of hours depending on the policy of the issuer in question.
The amount of money you can receive as a small loan for bad credit is not fixed. Different lenders have their loan policies so they review different criteria to determine who qualifies for a loan and how much.
How to Prepare for Business Loans for Bad Credit Application
If you want to apply for small business loans for bad credit to companies like Booster Financial, you need to prepare yourself and do it right so you can get the best outcome. Here are key steps to take.
Decide How Much You Need
The first thing you need to do is to decide how much you need. It makes no sense to begin your search for a lender when you are not even sure of how much you need. Having a knowledge of the amount will help you in your search for a willing lender. Furthermore, the amount will determine how much you pay as overall interest at the end of the loan tenure.
Know Your Credit Score
If you don’t know your current credit score, find out by applying to the credit bureau for your score. The credit score is one of the vital information a lender will demand before you can access the loan. Even though your credit score is now because of uncleared debt, don’t let that bother you. It is called a business loan for bad credit for a reason; you will definitely find willing lenders who will offer you the loan you seek.
With your credit information and a specific amount in mind, you can search for willing lenders who lend money to applicants with bad credit. Rather than depend on only one lender, increase your chances of getting the loan by searching for several lenders. Once you have compiled a shortlist of bad credit loan lenders, compare their interest rates and submit an application form to all of them.
Once you submit the forms to various lenders, a few will get back to you notifying whether you qualify or not. The ones that you qualify for will offer you terms which you must compare. Identify the one that offers the best deal and complete any required process. They will also ask for certain documents like your bank statement, tax returns and ID. Note that different lenders have different criteria so the document ma requested may vary.
How to Choose the Best Business Loans for Bad Credit
When you are faced with different lenders offering you business loans for bad credit at different rates, it can be quite challenging to choose an appropriate one. But with the right information, making the right decision shouldn’t be a problem.
Here are some of the things to look out for-
Don’t make the mistake many people make of applying to every bad credit loan provider you can find. This is an exercise in futility since these companies will only offer loans to those who qualify for it under their terms and conditions. To avoid wasting time, navigate to the website of any loan provider to read their eligibility requirement.
The most important information to look for is
Minimum credit score requirement
Minimum income level
Debt to income ratio
If you don’t qualify under any of these criteria, don’t waste your time applying because they will not give you the loan. However, if you qualify for all three categories your chances of getting the loan are high.
Interest Rates and Fees
Another thing to look out for when selecting providers is the interest rate and fees. Lenders calculate the interest rate at which they offer loans using different metrics. You can get quotes from different lenders and compare them. With the rates, you can tell how much the total interest amount will be at the end of the loan tenure. Other fees such as prepayment fees in addition to other costs should be factored into the total package. Only apply to a loan provider whose fees and rates you can afford. Booster Financial offer loans at competitive interest rates.
What are their repayment terms? Small business loans for bad credit have an average three years maximum repayment term while a few others may be longer. This term constitutes the window for repaying the entire loan including the interest. If the repayment term is shorter, the monthly repayment amount will Hugh but a longer repayment term has a much smaller amount per month. Don’t apply for a loan with a repayment term you cannot afford.
Knowing how much you need beforehand will help you target providers who can offer you that amount of money as a loan. Lenders have minimum and maximum amounts so be sure of this figure before submitting an application.
Type of Lender
Do you want an online lender or one that deals with applicants in person? The good news about the modern finance industry is that a lot of transactions are done online without customers and bankers meeting in person. If you want a stress-free option, you may opt for the online. In that case, you will have to choose a lender that operates an online platform. Online lenders have the lowest rates compared to banks that deal with in-person transactions.
When choosing an online lender consider the quality of their website, application process and site security.
What is the quality of their customer service? Do they take several days to reply to inquiries or do they respond in a matter of minutes or a few hours? The best online platforms have active customer representatives that offer speedy responses to queries and applications. If you are on a short window you want a lender with first class customer service.
Only choose lenders like Booster Financial that disburse approved loans not later than 48 hours after your request is granted and the loan approved. Loan providers mostly disburse cash during working days so if you have emergency expenses so settle, it is best to apply for the loan at the start of or middle of the week to avoid delays.
Advantages of Business Loans Bad Credit
There are a lot of advantages of small business loans for bad credit. Here are some of them.
Access to Cash
Most loan providers will not give you a loan if you have a bad credit score and this can be heart wrenching if you have a pressing financial need. However, it is people like you that this type of loan is tailor made for. You can access much needed cash to settle debt, pay staff salaries or expand your operational capacity. While others reject your application because of a poor credit score, a bad credit loan provider will grant your request.
No Asset Required
Most of the online platforms will not request a collateral before they offer you the loan. Small business loans are unsecured loans that do not require any asset backing. This can be of huge benefit to you if you don’t have any asset of value to put forward. This facility is great for small businesses and startups.
No Guarantor Required
Small business loans don’t require a guarantor. Rather than the assessment of a third party’s credit history, it is your history that will be considered. Dealing with you directly makes the process fast and stress free.
Varied Amount and Repayment Terms
There are different amounts on offer should you decide to go for a bad credit loan for your business. You can apply for a couple of hundreds of dollars or thousands of dollars depending on the lender you are talking to. Furthermore, there isn’t a rigid repayment plan as the loans have different maximum repayment terms so you have to pick the term you find favorable.
Disadvantages of Business Loans for Bad Credit
Every financial instrument has its disadvantages as much as it has advantages. Knowing what these disadvantages are will place you in a position of knowledge to decide whether you want to exercise this loan option or not.
The biggest disadvantage of business loans for bad credit is that it has a much higher interest rate than normal personal loans or other loan types. This is because the lender is taking a huge risk offering you the loan even with your checkered history. So this type of loan can increase your indebtedness so be sure it is a loan that will be worth the debt depending on what you wish to use it for.
The loan companies that offer loans to borrowers with poor credit are not as many as they should be. Compared to other types of loans, bad credit loan providers are in the minority. This gives you fewer options to pick from.
Shorter Repayment Window
Compared to other loan types, small business loans for bad credit have shorter repayment windows of three years or less. Some lenders may not even extend the window beyond 12 months. The shirt window may place you under financial strain to pay it back.
There are many loan sharks and dishonest outfits operating in the sector because it is largely unregulated. Applicants who couldn’t get loans from conventional lenders come to lenders in this sector and many are exploited. Many bad credit loan providers operate on the fringes and perpetrate different illegal activities like charging exorbitant rates or adding hidden fees to the borrower’s liability. This is why it is best to do your due diligence before you apply to any lender for a loan.
What Can You Do With Business Loans For Bad Credit?
There is so much you can do with small business loans for bad credit as a business owner such as the following
You can use this type of loan to pay up other pressing loans and debts with shorter windows. The bad thing about pressing debts is that they can make your business insolvent if care is not taken. For instance, if you have a pressing loan debt that you have to clear in the next 30 days, you can take a one year bad credit loan to offset the pressing one. By doing so, you have 11 more months to repay the new one. This move will give you some respite.
Pay Staff Salaries
No business can remain afloat for long if the salaries of staff remain unpaid. While conventional lenders will not be willing to give you a loan because of poor credit, bad credit loan lenders will be willing to give you financial help to settle a backlog of staff salaries so you can retain their services.
Settle Suppliers & Creditors
You can settle your suppliers and creditors with small business loans for bad credit. Setting invoices is a sure way to earn the commitment of your suppliers and creditors to continue to do business with you.
If there is certain equipment your business needs but you lack the financial capacity to pay for it on your own and no lender is willing to lend you the cash because you can apply for a small business loan for bad credit. This is one of the best things to do with a bad credit loan; even though it increases your indebtedness, you can pay it back and work your way towards creditworthiness as you make money with the new equipment.
Perhaps, your business has reached a point where it is hemorrhaging and in urgent need of a cash injection to expand; this type of loan can come in handy to help you expand your business. You may need cash to rent a bigger place, hire more hands or relocate to a new site and you need a significant outlay for logistics. This loan can help you expand your business even if you are currently in debt.
There is a lot you can do with small business loans for bad credit. The good news is that lenders like Booster Financial will not enforce what you use the money for. As a business owner, the prerogative is yours to decide how to spend the cash you get as a loan from them.
Introducing Booster Financial
If you are looking for a quick cash injection and other lenders have failed you because of poor credit ratings, Booster Financial is one lender you can trust to provide you with small business loans for bad credit to help you. Over the years, we have bailed so many businesses like yours and we will like to help you out too. We offer
Easy application process
Fast application approvals
Quick cash disbursement
No hidden charges
Affordable interest rates
Quality customer service
Beneficiaries of our loans are at liberty to spend the cash they receive without restrictions. That is why many small business owners have come to trust our services.
Let Us Throw You a Lifeline
Contact us today and let us offer you a lifeline where other lenders have disappointed you. No matter how bad your credit rating may be, we can offer you a lifeline with our tested and trusted financial services. Give us a call or send us a message today via any of our communication channels and our representatives will respond speedily.
Booster Financial Small Business Loans for Bad Credit FAQs
How much can I get as a loan?
That will depend on several factors. Our agent will evaluate your application after you submit it and make a determination about how much you qualify for.
Will I get the exact amount I ask for?
You may or may not get the exact amount you apply for. There are many factors we consider to determine how much a successful applicant can get.
Does Booster Financial place restrictions on what I can use the loan money for?
No, Booster Financial does not place restrictions on what you can use the loan money for. You are free to spend it however you like.
Do you use a fixed or flexible interest rate?
We have fixed and flexible interest rates. You are free to choose which one you want to go for.
Is your small business loan for bad credit a secured or unsecured loan?
No, Booster Financial Small business loans for bad credit are not secured loans. It is an unsecured loan. You don’t have to provide any asset as collateral to assess the loan.
Do I need a guarantor?
Unless under special conditions, you don’t need a guarantor to access our small business loans for bad credit unless under special conditions.
How do I apply for a loan?
Visit the loan application page, fill in your details and submit.
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