If you own a small business and have bad credit, you will have a hard time finding reliable payment processing or a loan? Bad credit, defaults, and bankruptcies can hurt the personal credit of business owners and their ability to start new business ventures. Almost 63 percent of small businesses seek out small business loans or lines of credit, but only 27 percent actually attain loans. If you are thinking of starting a business in 2016 and you have bad credit, here are a few things you should know.
While business and personal credit scores are separate, they are still intertwined. In the U.S., business scores range from 0 to 100, and personal scores range from 300 to 850. According to Experian, a business credit score includes a credit summary, corporate registration, key business facts, overview of payments and collections, and any tax liens, bankruptcy filings, or judgments. Personal credit scores are generated using the Fair Isaac Corp.’s algorithm. Individuals have the right to a free credit report, but business owners have to pay to get their business credit scores. And despite the fact that business and personal credit scores are separate, financial institutions and lenders still look at them to determine whether or not to lend out money.
If your poor credit score is keeping you from receiving a loan, you’ll have to consider alternative sources of funding.
If your credit is between 300 and 629, you should consider a micro lending option. They are a recommended option for small to medium-sized loans between $3,000 and $35,000. Micro lenders have far less restrictions than banks, and have much faster approval times.
Social Lenders. Forgo the application process all together and go straight to your potential customers or relatives for working capital. Entrepreneurs use social lending websites as a more efficient and less formal way to generate capital. The owner creates a message or business pitch to broadcast to potential funders from across the world. This is a cheap way to reach more clients than through conventional means.
Use Financial Assets. If your business is under a year old, your best option is to raise capital with equipment lenders that specialize in using office equipment as collateral. These types of loans place far less emphasis on personal credit
EMB believes that your business deserves a shot at a loan without unreasonably high interest rates or conditions. Get quick, simple, and straightforward, services from professional payment processors. EMB is the nation’s leading online small business lender with a streamlined application that is also user friendly. Contact us today to start your bad credit merchant account today.