As you may already know, having an above average credit score is hugely important while operating a small business. This can be particularly vital when you’re looking for additional working capital, and are thinking of applying for a small business loan.If your credit score is low, getting approved could be a challenge.
The good news is, it’s possible to get that loan even if you have poor credit, and below are pointers to help you do that:
Have a Concrete Business Plan
When applying for a small business loan with bad credit, it will be good to have a solid business plan that you can present to your lender.This will definitely help in convincing them that you are capable of repaying a loan.Do share your monthly sales as well as any improvements in your business’s financial status.Regardless of your credit score, a lender may be happier to approve you if you can show that you are are on a positive growth trajectory.
Work on Your Credit Score
Begin by scanning your business credit report to spot and iron out irregularities, if any.Remember that improving your score can’t be done overnight. You need to shape healthy financial habits and prove this credit bureaus over time.If you’re not in a hurry to get financing, then focus on boosting your score, and then go apply.
Get a Merchant Cash Advance
Similar to a loan, a merchant cash advance is a type of business financing, but it is an altogether different product.A cash advance is basically lump sum financing that you repay by giving your provider a portion of your personal credit card sales.In other words, even with bad credit, this product can still be available to you if your credit card sales are consistent.
Handle Your Bills Well
Paying your bills late hurts your credit score, so avoid this totally from hereon.Below are tips to help you pay your bills on-time:
Be guided by a monthly calendar: If you’re always at a loss when it comes to your bill deadlines, use a calendar that will send you alerts every time a due date approaches.
Review your budget: If you’re always missing deadlines because of limited cash availability, refine your budget to make sure that all your expenses are paid when they should be.
Get help from apps: There are many financial apps that can help you manage their bills. They are mostly free but you can get more advanced features for a fee.