(Newswire.net — March 31, 2018) — Every entrepreneur must know that even with bad credit record comes the hope of better loans and better interest rates. Just because your business is new or you do not have the necessary credit score for an SBA loan, it does not mean you cannot find a loan with excellent repayment terms. We are talking about those with a credit score of 600 or below. These struggling entrepreneurs have a lot on their plate, and financing their business while it is still taking its baby steps is one of their foremost priorities.
You may find several loan types depending on the amount you need and the repayment terms of these loans. Yes, each loan type comes with an associated cost, but it is no different from the charge or fee of the traditional loan types that banks usually dole out.
Peer-to-peer loans
Peer-to-peer (P2P) loans are quite new in the market. You will find several online platforms that specialize in P2P lending for young and established entrepreneurs. In fact, many of these platforms have investors interested in nascent ideas that are far from fruition. It is the responsibility of the P2P service to match the lenders to the borrowers. This form of loan does not depend on credit records, and the lenders do not check the company’s history. These lenders are more interested in the risks and the rewards. The higher the possibilities of success, the better are the chances of getting an excellent loan deal. Therefore, it is possible for you to get good loan offers from P2P platforms.
Short-term business loans
Short-term business loans are one of the smartest options to access money quickly. Entrepreneurs often find themselves in dire need of cash to pay for pending installments or to pay for the replacement of old equipment. In any of such cases, it is of paramount importance that the entrepreneur in question finds access to liquid cash within 24 hours or less. Traditional loan processes can take over two weeks, and sometimes, two months to complete. Alternative lending paves the way for business short term loan with interest rates lower than payday loans and business credit cards. These loans have a typical repayment period of 3 months to 18 months, and the interest rates usually start from 10%.
Loan from a friend or family
Among all other business loan options, this one seems to be least costly and most accessible. However, asking for a loan from acquaintances, family members or close friends can have its own repercussions. First, it can be extremely awkward to ask for money from people you know closely and meet frequently. Second, if the new business venture fails or there is a delay in profit generation, you will risk ruining your relationship with the lender. Getting into a formal agreement with the terms and interest rates laid down clearly can be challenging. Most importantly, irrespective of your regular payments, it will have no contribution to your credit score. There is no way you can end up building your credit score by borrowing money from people close to you.
Business lines of credit from credit unions
Are you a member of a credit union? Do you know someone who is a longstanding member of a credit union? This is the time to put your social skills to use and convince the credit union that you deserve a business loan. Short-term business loans and other types of business loans from credit unions usually bear lower interest rates. For small businesses and start-ups, the repayment terms are significantly friendly and nurturing. You must remember that these are non-profit organizations that try to offer the best rates to their clients. Therefore, even with a bad credit record, you have considerably higher chances of getting short-term business loans at lucrative rates from credit unions.
The requirements for each of these loan types are different, and you can expect them to vary between the different lending companies as well. Always check the background of your prospective lender before you get into an agreement, and always bargain a little before you settle for the best rates in the market.