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6 Steps to Get a Business Loan With Bad Credit

Have you heard taking out a business loan with bad credit is impossible? That’s not right. It’s difficult, but it’s possible. You just need to know what steps to take and turn to a reputable high-risk merchant funding provider in your field.

Getting a Business Loan With Bad Credit

Let’s start with the minimum credit score, the most famous FICO score. Usually, lenders take into account different factors when determining your eligibility, and different lenders set different minimum credit scores for borrowers. However, they usually require you to provide a minimum personal credit score of at least 600. This is true of small business loans from banks or credit unions.

What should you do to get a business loan with poor credit? 

1. See Whether You Qualify

Start by checking your eligibility. For this, you need to look at your personal and business credit scores, take into account how long you’ve been in business, your annual revenue, cash flow, and your current debt load, which shows how your business manages its finances and its ability to meet monthly obligations.

2. Know Why You’re Getting the Business Financing 

Small business financing can be for more than one purpose. Evaluate why you need those funds. Lenders will typically ask the purpose. 

3. Understand the Loan Terms 

Make sure to read the loan terms and understand them before applying. Pay close attention to the offered interest rate, monthly payments, and repayment schedule.

4. Be Prepared to Provide Collateral

Many lenders require borrowers to put up collateral so they can be sure borrowers can pay back the loan. They may require you to put your home, car, or business as collateral. 

5. Turn to a Reliable High-Risk Business Funding Provider  

Consider applying to a trustworthy high-risk business funding provider. For example, a merchant cash advance from a reputable alternative online lender like First American Merchant. FAM offers some of the easiest and fastest access to the funds you need, including the business loan with bad credit.

FAM, a BBB-accredited high-risk business funding provider, is famous for its MCA. This is an opportunity to receive funds based on your future credit card sales. These funding options are often unsecured, and there are no fixed repayment terms.

6. Have a Solid Business Plan

Write a thoroughly-thought business plan. Keep your financial statements ready. The loan provider wants to make sure you well understand your business and can pay back the loan. 

How to Obtain a Bad Credit Small Business Loan 

If you have a poor credit score, things will get more complicated for you than for borrowers with excellent credit. Thankfully, there are steps you can follow to obtain the funds you need. One of them is working with a respected alternative online lender in the high-risk field.