Starting up a new business or maintaining small business can be a very challenging process because you need to be extra careful in your spending. When you are running out of cash for your business, what must you do? You are required to obtain business loan from banks or other financial institutions. But what if your personal credit score is terribly low? Can you still be able to obtain unsecured credit line?
The answer is yes. There are sources which you can refer to. Let me show you three practical steps:
Step 1: Identify your financial needs
Before applying for bad credit unsecured business loan, the very first step you need to take is to identify your financial needs. How much cash do you really need to develop your business? Never include your personal spending. At the same time, you need to evaluate your ability for monthly repayment. Can you repay the loan on time? Please do your sales forecast in a realistic manner.
Step 2: Determining your loan amount
There are loan providers who offer bad credit unsecured loans for small business owners who have bad credit scores. If the loan amount you need is small, you are advised to look lenders who offer credit cards for small businesses. You will be awarded low credit line but the credit line is sufficient for you to solve your cash flow issue. However, if the loan amount you need is high, you should consider getting a Small Business Administration Loan. This is also one type of unsecured business loan backed by the government.
For small business owners who are qualified under this loan, they will be able to access to financial assistance even their credit ratings are low. There is a list of loan providers which you can refer to. You can apply directly for unsecured business loans from them to improve the financial situation of your business but please be prepared that the interest rates for these bad credit loans are much higher than regular business loans.
Step 3: Approaching your suppliers for credit line
In order to enhance your financial status, you should also apply for credit line from suppliers. Do you know that getting credit line from suppliers is also a form of unsecured business loan? You may not have sufficient cash to pay all your suppliers at one time. What you can do is to negotiate with your suppliers to provide you longer credit terms without interest charged so that you can have more cash on hand for other business purposes. Your suppliers will not check your personal credit history. They will not require any collateral from you too. So why don’t make use of this facility when you have bad credit score?
To sum up, having bad credit doesn’t mean that you can’t set up new business or you can’t develop your business. Things can work if you apply the right strategy even though your credit score is unsatisfied.