Have questions about obtaining start-up business loans with bad credit? You're not alone. Is it even possible to build business credit with poor personal credit? This article explains the facts and offers tips on getting the business credit you need to grow your company.
Is it possible to obtain business loans with bad credit?
Typically, no. However, don't lose all hope! There are effective ways to build business credit even if your personal FICO credit score is subpar. However, it may not be as simple and quick as you would like it to be. If you have bad personal credit, you'll need to meet some other criteria before you'll be able to get the credit lines and business loans you're looking for.
Do business lenders check personal credit scores?
Having good personal credit improves your fundability. There's no doubt about that. If you have an excellent credit rating, lenders will feel more confident about extending business credit lines and money loans.
However, there are scores of aspiring entrepreneurs looking for business loans. Many people have had a rough patch in their personal credit histories. But that doesn't necessarily mean that they will fail to pay their bills.
That means that not all business lenders check personal credit. Some base their lending decisions on other factors including:
● Business credit score (PAYDEX)
● Length of time in business
● Current debt level
● Annual revenue
Most lenders want to see a minimum time in the business of 6 months. Some will accept 3 months in business. Very few lenders consider lending to brand new startups.
Tips for qualifying for start-up business loans with bad credit:
If you have bad credit and want to qualify for a start-up business loan, there are various ways to improve your chances. Consider:
- Keep working on your personal credit score. As it increases over time because of responsible payment habits, so will the opportunities you have to obtain a business line of credit or business loan.
- Register your company as an LLC or Corporation. Apply for a free DUNS Number from Dun & Bradstreet (D&B). This 9-digit identifier code will establish the beginning of your company's Live Business Identity, which is required for most business credit opportunities.
- Establish trade lines with vendors that report to D&B, Equifax, and Experian. Make all of your payments on or ahead of schedule. Establish a track record of timely payments that will impress potential lenders.
- Establish a separate bank account, telephone and Internet account, and other relevant accounts in the legal name of your company that you used to register your DUNS Number. This helps to establish your company as a legitimate entity.
Obtaining start-up business loans with bad credit is not a simple task in most cases. If it all seems like a lot to manage, contact the experts at Genesis Business Credit
today. We help motivated entrepreneurs with poor credit to obtain business loans and other financial resources they need to launch, operate, maintain, and grow their companies into the future. Sources D&B