Bad Credit Business Loans for the Recovering Entrepreneur

Bad credit business loans make it possible for people who have bad credit to get funds for their monthly payments, overdue expenses, or overall business expansion. However, you must realize that only 20% of all applications for this type of loan are approved. One of the main reasons for the high number of borrowers being declined is the fact that lenders consider not only the viability of the business but also the financial standing of the owner-slash-borrower. When you apply for this business loan, the lending institution will comb through your credit rating and if they find anything they do not like, you will most likely be denied.

Below are some tips that can increase your chances of getting a business loan even if you have bad credit.

Separate Business from Personal Credit Report

If you are considering a bad credit business loan, you must shift the lender’s focus away from your personal credit rating. Right now, as your personal financial standing is not that attractive, your only hope lies in your business credit report. Your business credit score, unlike your personal one, is not linked to your social security number. Therefore, it can influence the decision of the lenders to your favor.   

Build Up your Business Credit Rating


The first step in building your business credit score is obtaining a legal identity and tax ID for your business. Doing so, your business will have an identity that is separate and distinct from you. To increase your score, start by opening small or limited credit lines with your business suppliers. Through these credit facilities, you will be able to build a strong financial history for your business.

Use Business Rating as Leverage for Small Bank Loans

After you have built an impressive business credit rating with your suppliers, you can start using that to apply for smaller bank loans. At this stage, you are still in the process of building your business credit history. You are not yet qualified for big business loans, but at the very least, your business is slowly creating a good score.

Once your business credit report attains a very desirable level, you can apply for bigger bad credit business loans. Many lenders would tend to focus on your business report rather than your personal credit rating. And even if they do combine your business and personal financial history, you will still end up as a favorable borrower if your business financial standing is excellent. Remember, with a good business credit report, you can overcome the bad reputation that you get from your unfavorable personal credit score.