Accessing working capital is important for businesses looking to expand and succeed. A line of credit is the place to find this, but several business owners find themselves knocked back from funding applications due to poor credit scores. If this’s something you have experienced, then keep reading. By the end of this piece, you’ll find out how to overcome this hurdle, and how to get the money you need to succeed.
Take an honest look at your credit
Before you ever submit a loan application, you need to ensure you know what your credit score is and what it means. You will require it later as you will choose what type of funding to apply for and where. And at this point, it’ll help you set realistic expectations for your prospects.
Consider your other qualifications
Now that you have a good grasp on what your credit score is and what that means for your funding, it is time to take a look at your other borrower qualifications. Lenders will look at many factors:
- Business credit score
- Business revenue
- Cash flow
- Time in business
- Debt load
- Business industry
So, your credit score matters. But if you have got sky-high revenue and a rock-solid business that is been around for several years, you will have an easier time qualifying for finance than if you do not have those things. And the better you understand your conditions, the less time you will waste applying for finance you cannot qualify for.
That is why we suggest you take the time to figure out precisely what your qualifications look like. That way, when you narrow down the list of options, you can easily decide which lenders are doable, which are aspirational, and which are out of the question.
Learn about bad-credit loan options
As we said in this guide, poor credit will limit your business funding options. We do not want to waste your time by pretending otherwise. But the good news is that you have some financing choices. As you look at these fundings, think back to your qualifications. As you do, you need to be capable of naturally figure out which can work and which are out of the question.
Apply for your financing of choice
Hopefully, as you read through the options, you saw one that looked like a good fit for your business. So now, you need to apply. If you are applying to finance (such as a microloan, line of credit, merchant cash advance), then you will gather up some documents:
• Personal tax returns
• Business tax returns
• Bank statements
• Other financial statements
• Business plan
The precise application materials will depend on the lender.
On the other hand, if you are crowdfunding the social network to fund, you should concentrate more on crafting a compelling pitch. You should think of images, videos, charts, and other materials you can use to sell people to your business.
Establish trade lines.
While a lot of information can wind up on your business credit reports, trade lines can be especially necessary. Business trade lines are lines of credit established between a business and a vendor, like an account with an office supply company where the company lets the business pay the account balance many days/weeks after getting the inventory.
Vendors can report this account to any reporting agency, but they aren’t required to do so. Depending on the type of credit report, a trade line that is reported can involve info like your available credit, the amount owed, the account’s terms, recent activity.
Pay on time — even better, pay earlier.
Your payment history with vendors, lenders, and credit card issuers is a vital factor in your business credit score. Actually, making on-time payments can be as necessary with your business accounts as it’s with your personal accounts. If you are late by some days, those late payments can show up in your business credit reports. With personal credit, a late payment cannot be reported to the credit bureaus unless you fall behind by 30 days.