Tips to get Bad Credit Business Loans
25 Jan 2006
Many lending companies give business loans to entrepreneurs that face bad credit problems. A credit rating score is used by lenders as an indicator of reliability, while granting business loans. Let us give you a quick overview of tips that can help you in getting bad credit business loans.
Concentrate on consolidating your credit card debts. A bank officer will be more sympathetic about the accident that kept you out of work than the habit of overspending on credit cards.
Keep in mind the early repayment penalties. Some banks charge a 2% to 5%-plus penalty if you decide to repay the loan early.
Since requests for credit show up on the credit report, do not apply to more than one bank at a time.
Keep documents like personal financial statements, tax returns, monthly cash flow projections, handy.
Prepare a business plan that showcases your long-term and short-term policy objectives. It will inform the lending company, how the entrepreneur intends to use the loan. For start-up businesses, it is recommended that they list expenditures, inventory and other expenses.
In case of established businesses, entrepreneurs should also produce references from local attorneys, accountants, suppliers and clients.
While applying, the entrepreneur should also keep in mind that there are two types of business loans available for those with bad credit - short term and long term. A short term loan is applicable for one year. It includes working capital loans, accounts receivable loans and lines of credit. Long-term loans are for applicable for at least seven years. They are used for major business expenses such as purchasing real estate and facilities, construction, durable equipment, furniture and fixtures, vehicles, etc.
In general, it is difficult to procure a business loan with bad credit. However, banks and other financial organizations do give loans but in return expect higher fees and interest rates.
Prepare a budget; refer to credit counseling services and improve your credit rating. Credit Ratings can be improved by making payments for credit cards, utilities and other debts like mortgage arrears on time.
VIP Credit offers different types of loans to entrepreneurs of business with bad credit. The application is quick and devoid of hassles. Fill up the online application form and you can be assured that our loan experts will get in touch within 24 hours.
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