Bad credit is definitely something that lenders do not want to see. Bad credit typically indicates one or two things. It is a sign that you have mismanaged your money. It may also be a sign that you have fallen on hard times. Regardless of the reason that you have bad credit, lenders consider this to be a risk. It is a sign that you are more likely to default on a loan.
A bad FICO score that is one that ranges from 300 to 629. It is one of the top reasons that loan applications are rejected. Only 23.3 percent of the applications submitted to big banks were approved in 2016. The good news is that there are alternatives to getting a loan from a bank. Your business’s operating history and strength will be looked at instead of your credit score. You will have to compare the interest rates, payment plans and terms of agreement.
Keep in mind that if your business is less than a year old, it will be hard to get a loan. Even if you have good credit, it may still be hard for you to get a loan.
If Your Credit Score is Under 500
If you have a credit score that is under 500, then it is best to choose a lender that does not have a minimum credit score to qualify. Kabbage and Fundbox do not have a minimum credit score. They are great options for businesses that need funding up to $100,000.
Fundbook does not have a minimum revenue. In order to get a line of credit from Kabbage, you will need a revenue of $50,000 and be in business for one year.
If Your Credit Score is Above 500
If your credit score is above 500, then you may be able to get a loan from OnDeck or BlueVine. Your business will need to make at least $100,000 in revenue. The lender will report the payments to all of the credit bureaus, which will help you build your credit. If you have unpaid customer invoices and have a credit score of at least 530, then you may want to apply for a loan with BlueVine.
You can get a loan from StreetShares if your credit score is above 600. You must be in business for at least one year and bring in $25,000 in revenue. However, the maximum loan that you can get is $100,000. The interest rates range from 9 to 40 percent.