It is a common fact that businesses wouldn’t run as smoothly without capital. Even with a fixed investment for your mini-business there are always unexpected expenses that will crop up from time to time. The only way to solve this problem is through small business loans. Is it possible for someone who has a bad credit rating to get such financial help? Yes, they can!
It is true that having a bad credit rating can hinder the possibility of getting a financial loan to help your small enterprise. Many traditional and conservative financial institutions like banks are only accepting individuals with good credit scores and disapprove of the rest. That is no longer the case.
Secured and unsecured loans…
Considering the number of financial lenders in the market, many stay on the competitive side by offering small business loans despite bad credit status. These loans come in two basic forms: secured and unsecured.
Secured loans are financial aids with collateral as security which can either be in residential or business property or any assets with the same value. Unsecured loans are the opposite; lenders will give you the financial help you ask without any security at all, which can be useful if you don’t have any plans in putting your assets at further risks.
Secured loans however, allow you to borrow larger amounts, unlike its counterpart, and at lower interest rates and better payment terms. Unsecured loans are usually attached with a much higher interest rate and much stricter payment terms.
Also, unsecured loans require in-depth credit checks and assurances before you can be accepted for one. Since this type of loan is very risky, especially on the lenders point-of-view, they need to maximize the possibility of getting back what is owed in case things go wrong.
However, this can be easily achieved by approaching SBA or Small Business Administration for help. This organization will act as assurance to the lender regarding the unsecured loan despite your bad credit status.