There are many reasons to use bad credit loans.
1. Determine WhyThe first step to getting bad credit loans is to figure out the main purpose of the loan. Believe it or not, you can use loans for many different reasons, like:
- To start your business
- To manage daily expenses
- Grow your business
- To have a nest egg in case problems arise.
- Fixing equipment
2. Research Loan TypesIn this step, you’ll research bad credit loans and decide which is for you based on your needs. For instance, suppose you just need to replace some equipment. Let’s say the espresso machine is the only problem in your coffee shop. If that’s the case, then you’d need an equipment financing loan.
Try truck factoring for a constant flow of cash.
This type of loan would get you the cash you need to replace the espresso machine. You’d pay the loan back in installments. In most equipment financing loans, the equipment itself is used as collateral, so make sure you pay on time. “What if I don’t have a coffee shop?” Equipment financing loans can be used for many types of equipment. But if you’re looking for a steadier flow of cash, try truck factoring. It works like this. Imagine you make bathroom fixtures. Stores all over the country them in stock. However, after a large delivery, one store says they can’t pay you. Instead of leaving empty-handed like you normally would, a truck factoring company would pay you. Then they would handle collecting payment for the customer. It’s an easy way to keep things flowing when customers can’t.
3. Research FinanciersOnce you know what type of bad credit loan you’re getting, then you can dig into who you’re getting it from. Now, a lot of people looking for bad credit loans assume they’re out of luck. Some think their only option is friends and family. This is simply not true. Having bad credit doesn’t mean you can’t get a loan. You just have to know which financiers to work with.
Alternative financiers work with all types of businesses regardless of credit score.
“But how do I know which ones to choose?” This is a good question. Let’s say you’re wanting to add a truck or two to your fleet. If your truck factoring company offers bad credit loans it might be a good idea to consider them. They already know you and your business information, so you won’t have to waste time gathering it for them. Plus, they’ll also know the industry pretty well and will give you advice on how to move forward. If you’re still not sure, consider an alternative financier. Alternative financiers typically work with all types of businesses regardless of credit score and other factors, like time in business. Get the Loan You Need!
You can check your credit score for free.
4. Get Your Credit ScoreNow that you have narrowed down a few potential financiers, it’s time to gather some information. This includes getting your credit score. If you’re worried that checking your score will hurt it, don’t be. You can check your credit score for free once a year with companies like Equifax, Experian, and TransUnion without it affecting your score. Or you can use Credit Karma to keep tabs on your score 24/7 for free.
Use a loan calculator to see how much your loan could cost.
Earlier we suggested you get a rough idea of the amount you want to borrow. Now’s the time to make that number solid. This means getting estimates on repair costs and other essentials. This also means figuring out about how much you make monthly and yearly. Why? Because you want to make sure the loan is affordable. You don’t want to get into a situation where you borrow so much that you can’t make the scheduled payments. If you’re not sure how much your loan could cost you, check out Nerdwallet’s small business loan calculator. It should give you a better idea of the bad credit loans you can afford.
5. Prepare to ApplyThe final step in getting bad credit loans is to gather all your business documents. These include:
- Business and personal tax returns
- Business and personal bank statements
- Business financial statements
- Business legal documents (e.g., articles of incorporation, commercial lease, franchise agreement) Not all financiers will need all of these documents, but it’s still good to have them on hand just in case.