For aspiring entrepreneurs or small business owners with less-than-perfect credit, accessing capital can feel like climbing a mountain. Fortunately, there are legitimate financial solutions tailored to business owners with low personal credit scores, including affordable choices that can help pave the way to better credit and larger financing amounts. In this article, we’ll explore the best low credit business loans that can help turn your business dreams into reality.
Understanding Low Credit Business Loans
The Challenge of Low Credit
Many traditional lenders are wary of extending loans to business owners with low credit scores, making it challenging for them to secure the necessary funds for their startup or expansion needs. Low credit can be a result of various factors, including late payments, high debt utilization, a past bankruptcy, or a limited credit history. The best business lenders for low credit have specialized programs that are designed to leverage non-credit factors to offer financing when other lenders are unable or unwilling to.
What are Low Credit Business Loans?
Low credit business loans are financial products designed specifically for individuals with below-average credit or even no credit at all. These loans come with terms and conditions that cater to the unique challenges faced by those with low credit scores. There is more risk usually associated with lending to a business owner with low credit, so the best low credit business lenders tend to offer short term loans at higher than normal financing rates. This practice enables the best low credit business lenders to extend capital to a business, but also hedge against the risk of a higher chance of default with an above-market return.
Top Low Credit Business Loans
1. Online Lenders
There are select online lenders such as Headway Capital that offer business financing products catered to low credit score borrowers. Headway’s popular True Line of Credit™ is available up to $100,000 and carries no set credit score minimum. The best low credit lenders often have more flexible criteria than traditional lenders and will usually consider factors beyond just your credit score.
2. Small Business Administration (SBA) Loans
Small Business Administration (SBA) loans, which are affordable loans often reserved by most SBA lenders for the best credit borrowers, may be available to business owners with less-than-perfect credit. South End Capital, a best lender and loan marketplace for low credit, offers government-backed SBA loans down to 650 credit. SBA loans typically have lower interest rates and longer repayment terms, making them an attractive option for small businesses.
3. Microloans
Microloans, another alternative for business owners with low credit, are small loans that are generally used to assist with business startup costs, or to jumpstart business growth. Micro loans can also help a business owner establish credit and while the loan amounts may be modest, they can serve as a stepping stone for business growth.
Conclusion
Securing a low credit business loan may seem like a difficult task, but with the right information and a business lender experienced in low-credit business financing, it’s very much possible. Whether through online lenders, low-credit SBA loans, or microloans, these financial products can provide the capital needed to fuel your business aspirations, regardless of your credit history.
Interested in accessing the best low credit business financing? Contact our recommended best low credit business lenders Headway Capital and South End Capital.