How to Get a Small Business Loan on Little Credit

Getting a loan with little credit can be done.

Those with little to no credit can find it difficult to secure a loan when they need one. For consumers trying to start or run a business, there may be a time when a loan is necessary, such as for needed repairs, payroll, bills and more. If you have little credit, there are still avenues you can explore to get the loan that you need for your business.

Instructions

1. Research your options with the Small Business Administration (SBA). The SBA is a free resource for business owners and offers many services. This company is an independent agency of the government that helps business owners find the right loans and financial assistance they need for their business. Also offered is on line training, newsletters, counseling, laws and regulations and more. The SBA can help point both new and seasoned business owners in the right direction when looking to get a loan no matter their credit score.

2. Apply with your local bank. If you have been a member of a bank for some time and have a good history with them, you may have better luck in securing a loan. Talk to the manager to see what type of business loan you may be eligible for, even though you have little credit. There is a chance that you can still get a loan,as long as you agree to a higher interest rate because of your credit history.

3. Offer collateral for the loan. If you have poor credit, this is a good solution to get the business loan that you need. You can offer an asset that is worth at least as much as the loan that you plan to take out, such as your vehicle, home, boat or property. Just remember that the bank can and will seize your collateral if you fail to repay the loan back.

4. Find a co-signer who is willing to co-sign a business loan for you. This person must have good to excellent credit in order to do so, as they will be the primary responsible borrower. Banks will be more likely to authorize a business loan to a customer if they have a back-up borrower as well, as there will now be two people responsible for the loan amount.

5. Ask family members or friends to lend you a small loan. If they agree, draw up a contract detailing how the loan will be paid back, in what increments, if interest is charged and any other pertinent information. No credit will be needed to secure a loan between friends or family.

6. Apply with a pay day loan company or a car title loan company. These two choices should only be used as a last resort, as they both carry high finance charges and are risky. With a pay day loan, you can quickly get the cash you need for your business, many times up to $1500 at one time, with minimal requirements. With a car title loan, you can borrow into the thousands, depending on the value of the car, as long as you posses the title free and clear. A car title loan company uses the title as collateral and can seize your vehicle in the event of a defaulted loan, so choose this option wisely.

References

• Small Business Administration
• Credit Loan: What You Need to Know About Payday Loans

Resources

• Americans for Fairness in Lending