You’re desperate for bad credit loans – especially since you walked in on Monday to discover that essential equipment is out of order. As you think about all the ways you could scrounge up the cash for repairs, your business partner suggests bad credit loans.
“Wait, that’s a thing?” you ask.
“Totally,” your partner says. “I was looking at bad credit loans last night when I first noticed the machine was acting up.” You take a seat as this all sinks in. For years you believed that getting a loan with bad credit was impossible. Each time your credit was knocked down a peg you got more worried, thinking your dream business would have to fold. And yet here your business partner sits with options. Real business loan options you can use.
We don’t blame you if you’ve bought into the myth that bad credit eliminates your borrowing options. Banks are known to turn away many people with good credit. Why would people with bad credit be different? If you need a bad credit loan, don’t worry. Below we’re going to go over seven loan options for people with bad credit.
A co-signer allows you to get the loan you need at a rate you can definitely afford.
1.Home Equity Line of Credit Loan
Also called a HELOC loan, home equity lines of credit can be a good option for those with bad credit. The only real requirement is that you own a home with equity, and the loan-to-value (LTV) is about 80 percent.
If you’re unsure how much you can borrow, check out Nerdwallet’s loan-to-value calculator. All you have to do is plug in your home’s current value, your mortgage balance, and how much you plan to take out.
While the interest rate is a little higher than if you had good credit, it’s still a lot better than you think. So don’t let your rating stop from considering this type of loan.
2. Credit Unions
Do you have an account with a credit union? If you do, now’s the time to check out their bad credit loan options. They are less strict than banks on loans and their rates are pretty reasonable.
The reason for this is that they are not a for-profit business like banks are. Plus, as a member of a credit union, you usually have a stake in the company itself, so they are more compelled to offer loans that suit their customers, regardless of their credit history.
Another way to get the loan you need is to consider a co-signer with good credit. Their good credit allows you to get the loan you need at a rate you can definitely afford.
There are a few things to consider before jumping into a loan like this. First, if you default on the loan, your co-signer is responsible. So that means you’ll have to make payments on time to keep your co-signer’s credit in good standing. Second, some people might not feel comfortable being a co-signer since their credit rating may change.
But if you know someone who’s willing to help, this is an affordable loan option to consider.
Peer-to-Peer services connect you to others in business who have extra cash to lend.
4. Loan From Family/Friends
This is a lot like the co-signer option but with a few huge differences. First, since you’re getting your bad credit loan directly from a family member or friend, your bad credit rating might not matter. Second, while missing payments won’t hurt either party’s credit, it could hurt the relationship. Third, this can be awkward to ask for and some might not be so willing. So keep that in mind.
However, if you do know someone who’s willing to help, great! Just be sure to put in writing the complete details of the loan like how much is being borrowed, the interest rate, and the payment schedule.
Also called P2P, these types of bad credit loans are made with business individuals and investors. Usually, a P2P service connects you to others in business who have extra cash to lend. While great interest rates improve with credit scores, you can still get an affordable rate despite your bad credit score.
6. Secured Loans
Suppose you’ve asked a few friends/family to cosign your bad credit loan. Understandably, they bow out. You don’t blame them. You’d feel awkward too if they came to you for a loan. If you’re worried you’re out of options, don’t be. They’re something you can do. Secured loans.
Secured loans are a lot like HELOC loans in that they require collateral to get started. These are usually your car, home, or something of value. The rates are pretty reasonable, but the loan terms are usually longer. Even still, secured loans can be a great way to get the bad credit loans you need.
7. Retirement Account Loans
This is the last stitch loan. If you’ve tried everything else but have a decent 401(k), borrowing against it might help. Just be sure to make it a loan instead of simply taking money out. If you take money out before you’re 60 years old, you could face a 10% early withdrawal fine or penalty.
Plus, any interest you pay on the loan is actually being paid to yourself for future use. Hence, this can actually give your 401(k) a small boost.
Contact First Capital for Bad Credit Loans Today!
Are you a growing company in need of bad credit loans? Are you looking to expand your business but need a flowing stream of cash instead of a trickle?
Call First Capital Business Finance today at 888-565-6692 or contact us online. We will get the information we need from you, answer any questions you may have, and thoroughly explain the entire process. Hopefully, as you ease your mind, we will be able to help you take care of your slow cash flow situation and get you on your way.
7 Ways to Get a Loan with Bad Credit | First Capital Business Finance