As of 2016, there were 28.8 million small businesses, which represented 99.7% of US businesses, according to the SBA.
As of 2017, big banks only approved nearly 24.1% of small business loans. Smaller banks approved around 48.9%. Alternative lenders approved 58.2% of loan requests, according to Biz2Credit
To get approved for any type of small business loan, lenders will want to see your ability to pay back the funding. So, you’ll be required to provide some information, including credit history. If you have bad credit, you’re likely to get a refusal from the majority of lenders. The thing is that bad credit may indicate that you had problems handling your finances in the past. So, what can you do to build good credit?
- Build a Legitimate Business
Keep legally separated your business from personal assets. Form a corporation or limited liability company (LLC) to free your personal debts from business debts. Focus on:
- Obtaining an EIN (the business equivalent of a Social Security number) from the IRS, together with a DUNS business credit profile number from Dun & Bradstreet
- Having a physical address and separate phone line and bank accounts for the business
- Building a professional business plan
- Acquiring a business license
- Maintaining perfect financial records, such as income and balance sheets, and tax return documents
- Stay on Top of Your Personal Credit Scores
The majority of banks will stay away from you if your FICO score is below 640. There are banks that will reject your loan application if you’re under 680. Don’t fail to pull your free personal credit report from one of the 3 credit reporting agencies every few months at annualcreditreport.com.
- Take Advantage of a Small Business Cash Advance
Cash advances have turned into a highly popular type of business funding. Even if you have bad credit, you can get approved for business funding if you turn to a reputable business loan provider like firstamericanmerchant.com. First American Merchant offers a small business cash advance bad credit to merchants of any type. Bad credit isn’t a problem for FAM. With FAM, you can enjoy:
- High approval rates (credit scores below 500 approved)
- Receive your funds within 72 hours
- Simple, flexible programs
- No tax returns or financials required
- Fast application process
Even if you have bad credit, you should take the right steps to improve your credit so to be able to enjoy the best for your small business. Follow the tips mentioned above and choose a respectable alternative online lender like FAM to turn to.