Loans For Small Businesses With Bad Credit: Some Answers

Michael asks…

Due to the financial crisis after clearing up credit will loans still be hard?

I am trying to clear up my credit and looks like everything will be clear ( hopefully) by perhaps december or january ( after checking the credit scores !) I should have half of the capital i need by january but due to the financial crisis will it be really feasible if to get a loan after this financial crisis? I am thinking about taking a second job to get half the funding but i know i can’t come up with the rest? The bad credit loans might be hard as well as the regular banks? The president mentioned last night with good credit it will be hard to get a loan so won’t this effect small business ? I am trying a franchise and worked on it for about a year. I am working on my corporation info to obtain business credit but i know you need a least two years for banks to look at you so i am cleaning up my credit and trying to raise a score. I am wondering if small business is doomed for it looks like we will be in a recession for at least two years? I know as a business owner you take a chance but due to the economy i would hate to postpone.

admin answers:

The idea of the bailout is to make money available for loans, but loans with tighter underwriting standards
So sure you can do it. . .YOU need to make good decisions, make good financial decisions. . . .
Pay every bill in full and on time. . . .pay down credit cards. . .pay 2-4 times minimum every month. . . .stop using credit cards unless you can pay in full when bill comes. . . .reduce spending. . . .pay any old debts off. . . . .take care of any delinquencies. . . . .reduce number of credit cards. . ..don’t apply for new credit. . . .if you have too much debt or a record of bad payment, fix it, and you’ll be golden. . . . Get that second job and SAVE. . . . Bad Credit Loans are largely a thing of the past. . . Good credit will be needed to get loans, and you can build your credit if you want to do this. . . .

John asks…

How can I get a business loan with bad credit?

I am trying to open my photography business in a small space but need a small loan to get started…..my credit is bad b/c I’ve had a hard time with it just being myself and my daughter working as just a medical assistants pay. I am very much into photography and have done runway shoots, helped models build their portfolio, weddings, etc… but would like my own studio so I don’t have to travel for all the on-site location shoots…please if someone can guide me… I really appreciate it…

admin answers:

Business loans are dependent on your personal credit so if your credit is bad, it is unlikely that you will be able to get a business loan.

Daniel asks…

With bad credit where can someone go, to get a loan for a small business. score 430?

admin answers:

Yup… 430 is right down there…

And – you have bad credit because you lack skill managing money. Don’t dig the whole deeper. A business startup takes between one and two years and you will be living on borrowed money while you’re building up your clientele (unless you’re openeing a bar; they’re the only thing that make a profit from day one). So, you’d better get smarter about finances first. Look up, and attend, a Dave Ramsey “Financial Peace University” course. You’ll learn valuable skills that you will *HAVE TO HAVE* to manage your business’s finances. Oh, and you’ll learn how to clean up your credit score while you’re at it.

Head over to the Small Business Administartion office in your town. You can find them in the phone book or at http://www.sba.gov They have advisors there that can help you put together a business plan (absolutely necessary) and help you locate sources of start-up financing.

Do your homework first. Look up a copy of Michael Gerber’s book “The E-Myth” (here it is at Amazon: http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About/dp/0887307280 ) It explains why the vast majority of small businesses fail (like 95% within the first five years) and what you can do to prevent it.

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