Loans For Small Business With No Credit

Nancy asks…

How hard is it to get a small business loan?

I need about 20,000 to get this well researched idea going and I don’t have the capital to do it. I rent an apartment and own no real collateral but I make roughly 70K a year before taxes in California. My credit score is average with nothing major on record. I’m confident in my business plan but don’t know how much weight that will carry when applying for this funding. Any serious input from someone with experience in this area?

admin answers:

Watch out for these internet scammers.

The Small Business Administration provides lots of information on getting a loan, but here are a couple of quick points:

*Have a business plan completed, showing how you will be able to repay the loan with income generated from the business.

*Make sure you pull credit reports from all three agencies, and check your credit BEFORE you apply for a loan. If you find any discrepancies, act on that first. If you have a credit score over 750, you are good. Between 675-750, be prepared to explain how you got into that situation, and show how you are working your way out.

*Legitimate loan officers request at least 20% down on a business loan nowdays. Can you scrape up $4,000? Having a down payment is important to show how serious you are about the project. It takes some of the risk off the lender, so they are more likely to take your prospect seriously.

*Every state has a SBDC, Small Business Development Center, that can help you get ready for your venture, at no charge. A certified business consultant will work with you at no cost, helping you to get ready to apply and start your business. You can also get counseling from a seasoned professional in your industry from SCORE.

I am an SBTDC business consultant in Michigan, and my answers are based on what the current SBA and banking community have told us to share with our clients. There are numerous free and low cost classes out there to help answer your questions in a legitimate way, offered online at or from your local SBDC.

Good luck in your venture! America relies on entrepreneurs to help the economy, and your work is important!

George asks…

Any tips on how to finance startup cost for small business with no money down but excellent credit?

We are going to sell autos on eBay motors and off our lot, auto detailing and repairs. We have been to a couple of local banks and just don’t quite seem to fit their criteria. We’ve always been self employed in some form so our tax returns are pathetic. We don’t have any money to put into the business which, well, that’s why we need financing. Am I to believe that a business can’t be started unless you have thousands of your own money to put into it? SBA apparantly requires 25% of the loan amount to be available from us as cash. If I had that money, I probably wouldn’t need much of a loan. Anyway, I’m a bit frustrated because we’re not fitting into the commercial lending ‘box’. We are talented intelligent people with excellent credit but short on cash. Any ideas?

admin answers:

This is a free capital society —- you are able to raise capital from private investors. “Friends and families” or someone that would really get how lucrative this could be. You don’t need banks at this stage. SHORT SUMMARY—Put the numbers together, a short biz plan, talk to people about having them invest in you and offer your own interest terms using a promissory note or offer stock in your new company. You’ll need the help of someone that has done it or a legal professional but it is VERY common…I’ve raised a million plus. Or get people to invest with their services for a piece of the pie. Any local auto dealers would be interested in your deal? Also, consider doing something smaller to start and scale it up so people will have confidence in investing.

Sandra asks…

I own a small business, and looking for a small loan that would be secured by the equipment bought..?

I currently own and operate an inflatable bounce house rental business in Las Vegas, and I am currently getting more customers than I have equipment, so I am looking for a small loan to purchase additional equipment, which would be the collateral for the loan..However, I do not have good credit, but I have reestablished my credit with a couple of auto loans, but my credit score is still to low for a personal loan, or so I have been told by other lenders..The payment for this loan would be no problem, because the income generated by this additional equipment, would be far above the amount owed every month..This equipment I am looking to purchase, is new equipment, and would be very good collateral..Thanks

admin answers:

Have you tried the SBA (Small Business Administration) as a source?

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