Your credit score has a big influence on the size and type of loan that you can secure for your business.
Lenders are more comfortable giving money to companies with favorable scores, but there are options available even if your credit is less than perfect.
A business credit score of 75 or more shows lenders that you can be trusted to make payments on time and gives you access to just about any type of loan you could want.
Traditional bank loans offer the lowest interest rates and reasonable payments on large amounts suitable for covering expensive purchases or expanding your business. You can also get a loan specifically for equipment if you need to purchase something new or replace aging machinery.
A business line of credit is another good option for companies. These work almost like a cross between a credit card and a loan by offering you a set amount that you can borrow as needed. Interest is only charged for the money you actually use, so you have a buffer available without the burden of monthly payments on the full amount.
When your score is reasonable but could use a little boost, an alternative lender may be a better bet.
Alternative lenders like ARF Financial offer a wider range of options that get money to you faster. Make sure that you understand all terms and interest rates to avoid predatory lenders with unreasonable fees. Stay clear of merchant cash advance companies. They are not regulated and are almost guaranteed to have predatory rates.
If you only need a small amount of money and can support higher monthly payments, a short-term loan could be the right choice. These loans provide quick funding and are paid off faster than other loan types, allowing you to avoid large amounts of long-term debt.
You’re not out of luck if you need a loan and your credit is bad. Alternative business lenders are often willing to extend a loan as long as your monthly income meets their minimum criteria.
Business credit cards may be the most viable option if you have trouble getting money from a lender. Limit your purchases to avoid maxing out the card, and make all of your payments on time to help improve your credit rating.
Regardless of your credit score and the loans available to you, researching and shopping around is always the best approach.
Contact us today to speak with a small business loan consultant to learn what options are available to you.