Are you trying to get a new business off the ground but have bad credit? Forget about the complicated process of applying for bank loans. You can easily qualify for start-up business loans, even with poor credit.
You just need to apply for microloans provided by the Small Business Administration (SBA). Originally, microloans were given to people with poor credit, minorities, and women. Today, anyone can apply for the SBA microloans to fund new startups or obtain money for day-to-day expenditure for an existing business. It’s possible to borrow up to $50,000 even with a “poor” credit score of 550.
While the SBA maintains offices in about 68 districts, they don’t issue loans directly. Instead, you have to apply through qualified independent lenders.
Benefits of SBA Loans
- Affordable terms: You can save on the cost of getting a business loan by getting lower rates and fees. That’s because SBA-guaranteed loans pose less risk to the lender.
- Business counseling: It’s one of the great hallmarks of getting an SBA-guaranteed loan. You can obtain the right advice to power your business.
- Good for business: These loans are good for small businesses because you’re not required to make a large down payment. The repayment amounts are flexible. It’s not a must to provide any collateral to the lender.
- Attractive loan amount: You can borrow up to $50,000 to fund a new venture.
Can I Get Startup Business Loan with Poor Credit?
The best thing about SBA-guaranteed loans is that you can get approved without having good credit. All credit types are accepted.
The lenders can accommodate all borrowers because they don’t have strict restrictions as banks. Your entire financial situation is considered, including your capacity to repay the loan.
How to Get Approved for SBA Microloans
SBA-guaranteed loans are very attractive. Getting approved for one is also involving because you must sufficiently prove that you are the best candidate.
Startup businesses will have a steeper hill to climb compared to established businesses when it comes to SMA microloans. The process of getting approved involves:
Step 1: Finding an intermediary lender
These are the designated companies that the SBA partners with. The SBA sets out rules for intermediaries, including the maximum loan amount (typically $10,000 to $20,000), maximum interest rate, and repayment period (not more than 6 years).
Step 2: Creating a business plan
It’s essential to have an expertly written business plan. It provides the intermediary with important information.
Step 3: Submitting your documents
The next step is supplying the lender with all they need to evaluate your loan application and come up with the final ending decision.
Get Started Today
Are you looking for a startup business loan with poor credit? As long as you’re a responsible business operating in the US, you are eligible for an SBA loan. But many people are rejected for not following the right application procedures. That’s why it makes sense to get professional help when applying.