Best Business Loans For Bad Credit Scores
At Clarify, we believe that a low credit score shouldn’t stop you from business success. So, we work with you to identify a loan option that fits your needs and unique cash flow requirements.
Here are the best types of loans for borrowers with less-than-stellar personal credit ratings.
1. Short Term Business Loan
Term loans are a type of business financing with short repayment terms ranging from six months to two years. You receive a lump-sum amount that you repay through fixed, regular payments. A short-term loan is an excellent option for new businesses or startups that may not qualify to receive funding from traditional lenders like banks or credit unions.
With Clarify, you can get short-term loans with APRs (annual percentage rates) as low as 7% without any collateral. The term loans also have low credit score requirements. As long as your business has been operational for at least six months and you can prove that you generate over $10,000 in monthly income or have at least $120,000 in annual revenue, we can get you pre-approved.
2. Business Line of Credit
A line of credit works much like a business credit card. You get a set credit limit, but you only make payments or get charged interest for the amount you borrow. Unlike a credit card, a line of credit has a much lower interest rate and doesn’t have any prepayment penalties. It’s also a great tool to improve your business credit score over time.
Most business owners use this type of funding to cover working capital, such as buying inventory or paying payroll. But the main advantage of a line of credit is its flexibility — you can use it however or whenever your business needs it.
3. Invoice Financing
Invoice financing is a way for businesses to borrow money using accounts receivable. If you have outstanding invoices, it’s an excellent funding option. The invoices act as collateral, so your credit score isn’t a factor in getting approved.
4. Equipment Financing
Just like a traditional car loan, equipment financing provides capital to purchase new or used equipment. Whether you’re a trucker, restaurant owner, or construction company, an equipment loan can help you grow your business or replace old assets.
Is a Business Loan a Good Idea If You Have Bad Credit?
Yes, a business loan is still a good idea even if you have bad credit. When you run a business, you manage your capital to make profits. At the same time, you’re also looking for opportunities to grow. Since you need capital to make profits and expand, a loan is sometimes necessary.
At Clarify, we understand that bad personal credit is not always the result of bad financial habits. That’s why understanding your loan options is important — so you can take advantage of available resources that can help you manage and grow your business.
Top Uses for Bad Credit Loans
At Clarify, we believe that low credit scores shouldn’t be a barrier to reaching your business goals. Here are some ways borrowers use loans to meet their business needs.
During slow periods, you might experience a drop in sales. A business loan, whether it’s through invoice factoring or a short-term business loan, can provide an infusion of working capital to help offset a temporary fluctuation in sales.
We understand how difficult it’s been for small businesses nationwide. If your business has seen a downturn in sales due to the pandemic, Clarify can help you get the funds needed to keep your company going.
Inventory & Supplies:
Many businesses get loans to purchase inventory and supplies to ensure they can meet customer demands and keep operations running smoothly. Some business owners also use their funds to buy in bulk and save money that way.
We understand that you may need equipment to get the job done. That’s why we offer financing solutions like working capital loans and equipment financing to help you purchase new or used equipment. These types of financing are also available for borrowers with low credit scores.
Payroll & Taxes
Payroll and taxes are unavoidable expenses every business incurs. If you’re low on funds, loans can help ensure you can meet your financial obligations to your employees and the government without delay.
Refinance existing debt with loan terms that work for you. Whether you want to pay off your loans with high interest rates or have more flexibility with your payment structure, we have you covered.
Bad Credit Business Loan FAQs
They’ll look at your business income, how long your business has been operational, and your credit history. Some will also consider the stability and profitability of your business. Contact us directly for any questions, as a Clarify adviser is always ready to discuss available options for you.