small business loans bad credit

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Many small business owners don’t get their company off the ground because they just don’t have the working capital to grow. The typical small business owner is constantly accumulating debt and their credit score can drop quickly as business financing requirements are often overwhelming during slow cash flow periods. Once the debt and credit problems are there, people generally believe that no financial institution will give them a small business loan. Granted, traditional financing options such as banks and prime lenders will not be an option, but we have an alternative.

How Shield Funding’s Bad Credit Business Loans Work

Shield Funding’s bad credit business loans allow small business owners to secure financing with bad credit. We only require that you own your own business for at least 3 months and you have monthly revenues, not profit, gross revenues of $2,500 or more if you accept credit cards, and $20,000 or more if you do not process credit cards.

One way we provide small business loans to borrowers with bad credit is by exchanging a lump sum of cash in advance of future receivables. As the company generates revenue with its new cash infusion a very small portion of the revenue will be set aside to pay off the loan. This type of structure has been very successful because it gives business owners the ability to improve or expand products or services, and the increase in revenues from the company investing back in the business makes it easier to pay off the loan. There is no need for lengthy credit checks or impressive tax returns, the most important requirement is having a company in business that is generating cash flow.

Our bad credit small business loan programs are tailored for small business owners that cannot get approved for traditional financing and they are in need of additional capital to grow their business. Some of our most popular lending options include:

1. Bad Credit Working Capital Loans

  • Working capital loans are a great way to get short term financing to deal with immediate cash flow issues. There are no restrictions on how you choose to utilize the funding as with many traditional working capital options, you can distribute the capital how you see fit. Whether you are considering boosting your inventory to manage seasonal sales, or you are looking to upgrade equipment, our working capital loans can be a great fit.

2. Small Business Loans for Women With Bad Credit

  • Woman entrepreneurs continue to demonstrate great business acumen. It was the impetus for launching this small business loan program. We understand that it is not out of the ordinary for successful female business owners to experience a dip in their credit scores; in fact, bad credit is often a symptom of a successful business strategy. This program provides immediate funding to female small business owners and the business loan can be used according to any type of business strategy. If you are a female business owner with poor credit or no credit at all this can be a great opportunity to get the money you need to help grow you business.

3. Bad Credit Business Cash Advance

  • This is a great way to invest in your business and the only requirement is that you process credit cards. The approval rate for this funding program is very high because we base the funding amount on the gross revenues of your credit card sales and not your personal credit score. We can provide immediate cash even if your credit score is less than 600. If you have really bad credit and your business needs money this can be the perfect way to get a quick infusion of funds.

4. Bad Credit ACH Business Loan

  • Are you looking for a small business loan but you do not meet traditional bank loan standards because of a bad credit score? The ach business loan was created for small business owners that do not process credit cards and at the same time have a very bad credit score. The funding amount is mostly based on your monthly sales and the loan is paid back incrementally as your company generates revenue so there is no need to approve the loan based solely on credit history. This is an excellent way to satisfy any type of financial business need without the requirement of credit card revenue.

5. Business Loans After Bankruptcy

  • Having a bankruptcy in your credit history practically disqualifies you from any type of bank loan or traditional credit source. This business loan program was established because bankruptcies can show on your credit score for up to ten years or more, and this is often an inaccurate description of your current credit situation. We look at the financial position of your business today and not the bankruptcies in your history when giving an approval. If you have bad credit because of a recent or old bankruptcy in your credit file this is a perfect way to get immediate money to help manage business expenses.

6. High Risk Business Loans

  • Are you a business owner in need of a small business loan but are classified as a high risk because of your credit history or industry? Our high risk business loans take out your credit history from the approval equation and fund you based on the performance of your business. If your business is performing great financially but bad choices or circumstances have you categorized as a high risk applicant then this business loan option is tailored for you.

7. Custom Funding Options

  • We also feature individually structured small business funding options that can be tailored for companies that have unique revenue streams or seasonal based companies that require a small business loan outside of any of our established programs.

Why Would We Fund You If You Have Bad Credit?

This is a great question that many people ask when considering a bad credit business loan. There are several reasons why we approve low or no credit borrowers. First and most importantly it is because we do not believe that credit histories accurately depict the likelihood that a borrower will pay back a loan. Most negative credit items stay on a report for seven years or more, and it is more than likely that the borrower’s entire credit profile and ability to pay back a loan has changed significantly. In addition, that change is almost always a positive one because borrower’s learn from their mistakes, especially business owners.

Second, negative items on a piece of paper might not tell the whole story and is a limited way of analyzing a loan application. There are myriad reasons that a small business owner can develop poor credit, and some of those reasons are justified in a successful long term strategy. It is well known that small businesses in the early stages of growth often run into cash flow problems. Some bills have a higher priority than others when it comes to maintaining your business, and when a young business is struggling it is very likely that lower priority bills are shelved until better times. This can result in a strike on your credit but allows you the opportunity to keep building your business. This type of juggling between creditors is a common occurrence in business and can be considered good business management, even if it results in a lower credit rating. This example extends to so many types of circumstances and highlights how credit scores are not necessarily a good way to judge a borrower’s ability to repay a loan.

Lastly, we structure our bad credit business loan programs different than banks. We base approval and payment amounts based on company revenues and not solely on credit history. Our experience after more than a decade as a financial institution gives us the ability to understand how companies perform best. We know what payment structures will help both the company grow and at the same time allow it the financial flexibility pay back the borrowed funds. We have have a modern approach to understanding borrowers, companies, and financial risk.

Why Traditional Lenders Do Not Lend

At the other side of the lending spectrum there are some justifiable reasons as to why banks are not providing small business owners with access to capital. At the top of the list and more support for launching our bad credit lending programs is that borrowers today are much less credit worthy than in prior years. It is a well known fact that more than 75% of Americans today have a credit score below 700, many even much less than that lofty number. In conjunction with the bad credit problem, banks are under much stricter lending guidelines as a result of the financial collapse of 2008. So banks having to demonstrate documented support for their approvals are understandably limited in their ability to approve a borrower. This is just part of the reasoning for the tightness in traditional lending and if you want to learn more see our recently published article on the topic.

most business owners have poor credit scores

How Your Bad Credit Impacts Access to a Small Business Loan

Although we feature many business financing options and often approve applicants in the 500 FICO score range, it is important to emphasize the need for borrowers to improve their credit history if at all possible before applying. A little bit of effort towards boosting your credit rating can help guarantee your approval.

Just because we use your company’s revenue statistics as our main approval factor, it does not mean we do not consider your credit history when gauging risk. The more derogatory items on your credit report the more risky the loan is. Here are some of the main items that affect your overall funding structure:

    • NSF’s: Every time you have a check bounce or have a negative balance in your business checking account it adds to your risk as an applicant.
    • Foreclosures: When you have property or assets that go into foreclosure.
    • Tax-liens: a tax lien is the result of delinquent taxes on real or personal property, or it can be assessed for failure to pay income taxes or other types of taxes.
    • Collections: When you have debts past due the creditor can have your forwarded to a debt collection agency.
    • Judgments: A debt after a judgment ruling which can result in the creditor seizing wages, freezing your bank accounts, and other potential ways of taking your belongings to settle the debt.

The above list is not extensive as there are so many negative items that can find their way into your credit history, but these are some of typical derogatory items we consider when gauging the risk associated with a small business loan application. Improving your FICO score can have a positive impact on the rates and terms of your loan. Here are some steps you can take to improve your credit before you apply.

1. Know your credit score and have a clear understanding of all of the items on your credit report. What many borrowers find after viewing an updated credit report is that many of the derogatory items are outdated or inaccurate and some basic steps taken can have those items removed or favorably updated and this can result in a substantial increase in the borrower’s credit rating. To begin this process and access your free credit report visit annual credit report and for your updated FICO score at no charge here is a list of many of the companies that offer it for free with your account.

2. Another step borrower’s can take to improve their credit rating is by contacting creditors that have initiated a claim against the borrower and it is accurate and current. Most creditors are willing to settle the account for much less than the actual owed amount. The overall expense of higher rates on a small business loan because of negative credit items in a report can be ameliorated or even result in a financial gain to the borrower by the time the funds are paid back.

Here is a starter article on repairing your credit and here is an additional resource for improving your credit. Remember that research is important when looking at any type of credit repair and a borrower should take every step you can to avoid the many credit repair scams that exist.

Increasing your chances of receiving better rates and higher funding amounts with your small business loan is not limited to improving your personal credit history. Because the most important factor for approving a bad credit business loan is the company’s revenues and financial strength it makes sense to look at ways to improve your financial statements. Some strategies to improve your company’s financial statements and ultimately the attractiveness of your loan application are:

A. One of the simplest ways to increase revenue is to reach out to existing credit customer’s and request that they settle their outstanding balances.

B. Better inventory management is also a very easy way to improve your balance sheet. Maintaining tighter inventory levels is a great way to improve cash flow. Revisiting your inventory acquisition costs can also expose potential cost saving measures while at the same time highlighting possible over payments or outright mismanagement.

C. Another great strategy for improving your financial picture is to offer discounts and incentives to existing or new clients to make more or larger purchases. This can demonstrate a steady increases in sales and revenue and make you an attractive borrower. Once you have taken steps to improve your credit score and overall company financial picture you will not only improve your chances of funding, but the rates and terms of that funding.

Why a Bad Credit Business Loan is a Good Business Decision

Bad credit not only affects you personally, it can have a profound impact on your business. There is a lot of research to support that the most common reason small businesses fail is because of a lack of funding. According to a recent study on entrepreneurship, a large number of small businesses closed their doors solely because they ran out of money. There are many good businesses that are managed well and have great potential, and are even likely to succeed, but they simply run into cash flow problems.

It is a well known fact that the lack of access to capital is directly tied to lower credit scores. This lack of access can affect different companies in various ways. Some companies are structured where there is a significant gap between when they complete a project to when they receive payment. Not having the additional funding cushion to deal with these gaps can easily result in a closed business. Other companies because of a strained cash flow reduce their budget on inventory and staff which results in subpar products or services; a result that ultimately drains the life out of a business. According to the annual report by the Corporation for Enterprise Development, approximately 37% of experienced small business owners often fall short of the money they need to cover business expenses. There is plenty of historical data to support why so many of America’s small businesses are failing because of a lack of access to capital and here is a detailed infographic that highlights some statistical data on small business failures in this country and its relation to a lack of business financing.

Our Belief

We believe that good companies that are well managed and have great potential should not have to close their doors because of bad credit or the resulting cash flow issues that stem from it. Our historical lending data has shown that many small business owners that have received a bad credit business loan have not only continued to do great business, but have gone on to build successful companies. For these reasons small business loans should be made available to business owners that have bad credit or just do not meet traditional financing standards.

Why Choose Us

Advantages of Shield Funding Bad Credit Business Loans

  • No Collateral Required on Small Business Loans
  • The Most Competitive Rates
  • Flexible Repayment Structure
  • No Closing Fees or Application Costs
  • Various Bad Credit Financing Options
  • Funds Deposited In Your Bank Quickly

Shield Funding Reviews

A+ Rating With BBB For Fair Lending Practices
AAA Rating with Business Consumer Alliance
Rated Number 1 Alternative Lender

What Actual Borrowers are Saying

– Jane, Collectibles Retailer
[su_quote]At the time, we needed a way to keep our shelves stocked, so we turned to Shield Funding. With their business cash advance, we were able to manage our inventory, especially during the current economic downturn[/su_quote]

– Robert Martin, Owner of Polynesian Hair Design and Tanning
[su_quote]I’ve talked to tons of lenders and Sam was the only one who treated me like a real person, not a number. With the unsecured small business loan they provided me, I was able to buy more tanning beds and successfully expanding my tanning salon business. They gave me the working capital I needed when I needed it”.[/su_quote]

Are you a startup looking for a bad credit business loan?

Unfortunately we do not have a program that provides small business loans to entrepreneurs who do not have an established company with at least some revenue. This does not mean that funding for your company or idea is not possible. In fact there are many web based lenders that have options for these stages of financing and you can get started be exploring some of the options through the SBA. There is also a microloan program for entrepreneurs that have bad credit but want to start a business.

Small Business Grants with Bad Credit

Although a large portion of the web and other publications discuss options for grants there are very few actual grants available for small business owners or entrepreneurs with bad credit. You can read more on this topic and see if you are eligible for a business grant with this SBA Resource.

We take pride in providing as many funding opportunities as possible to small business owners. We believe that companies that have great potential and are well managed should have an opportunity to succeed regardless of the credit rating of the business owner. We have a wide variety of small business loan programs and a very flexible approval process, and we will take every step to see that your business gets the money it needs in a timely manner with the best rates and terms. We look forward to working with you.