From a business perspective, it can definitely be said that the US economy is finally moving towards better times. Employment is rising, opportunities are finally starting to surface and the overall sentiment of the market is positive – something that was definitely lacking in the last few years. Entrepreneurs are finally starting to take risks and investors are thankfully beginning to back up their bold endeavors with much needed capital.
But all is not as rosy at it seems. Although lending capital, particularly to small business houses has now reached the highest point in the curve over the last few years, there are still many challenges left for these borrowers to face, especially those with bad credit. The recent economic depression has been a major cause behind bad credit ratings of borrowers, many of which had declared bankruptcy in the troubled times. And now the decisions of the past are coming back to haunt them.
Most banks are still not up for lending capital to businesses with bad credit. These enterprises have very valid reasons for their credit troubles. Bad remarks about a company take years of efforts to get corrected and recession didn’t exactly make things easy for small businesses. Still, the need of funds is ever present which cannot be fulfilled through the traditional sources. So what options are available for business loans for bad credit? Let’s examine..
· Home can be good collateral to present for securing a loan. Home equity loans are a great way to circumvent the time required to build the credit score of a start-up business or correct an already bad credit history. But remember to factor in the risks involved while making this decision.
· Merchant cash advance can also be a good option for those looking for business loans for bad credit. These are very short term advances that offer the entrepreneur with a lump sum advance against the business’ future credit and debit card sales. The duration of the loan can be expected to be somewhere around 24 months and payments are made at regular shirt intervals.
· There are many private investor companies that are ready to take the risk of investing money in a business with a bad credit history. These companies generally charge a premium for the extra risk they are bearing.
· If your fund requirement is small, you can always go for availing micro loans. The amount of these loans generally ranges $5000 to $50000. These are generally offered by some non-profit organisations and certain bankers and are a great option for those entrepreneurs looking in need of business loans for bad credit.
· And last but not least, you can look into your last resort and seek financial assistance from family and friends. Investment that stems from within your family will tend to be safest from a financial point of view. And as always, your credit score won’t matter to your loved ones.