A bad credit score can make borrowing difficult for any business owner. Even if your company has strong financials, applying for small business loans with bad credit can be challenging with any traditional lender. Many banks today are focused on reducing risk, therefore only borrowers with high FICO scores are being considered. Shield Funding has small business loan options for any business owner that cannot obtain traditional financing.
At Shield Funding we believe the traditional loan process is outdated. An approval for a small business loan should be based on more than just a FICO score. We have learned that a company’s financial health and recent history is just as, if not more important in the approval process. For this reason we have bad credit business loans for FICO scores as low as 500. We also offer premier funding programs for borrowers that have FICO scores above 600. If you own your own business and are looking for a small business loan with bad credit we can help.
Our programs vary in estimated length of time, rates, approval amounts and some basic minimum requirements. The minimum requirement is that you own your own business for at least 3 months and you have monthly gross revenue above $8,000. We DO NOT require that you accept credit cards or that you have to switch processors if you do accept credit cards. All of the business loans for bad credit that we offer feature different rates and terms based on your application and some basic requirements.
Our Premier Plus bad credit business loans feature some of the best rates and terms we offer. This option is for small business owners that have credit scores as high as 660 and need financing amounts ranging as high as 1 million dollars with payback periods ranging up to 18 months. This option is great for business owners that have reasonable credit and are looking for the largest loan amount with more than a year to pay back the loan.
Our Premier bad credit business loans are a better option for business owners that have more than a year in business and do not have really poor credit. The Premier program has a business loan duration as long as 1 year with a maximum loan amount of up to $250,000. This loan program is great for companies looking for a larger financing option with at least a year to pay back the loan.
Our Standard business loans are a better option than our Starter program because the loan duration can go as high as 10 months. This option is for small business owners that have credit scores above 500 but want a slightly longer term payback period for their loan. It also features high approval amounts ranging up to $150,000. This type of bad credit business loan is great for companies looking to make substantial short term investments into expanding the business and cannot obtain traditional financing because of a poor credit history.
Our Starter bad credit business loans are a great option for borrowers with really bad credit and only in business for a few months. This program has a maximum loan value of $20,000 and a maximum duration of 5 months, but can be a really good option for borrowers that cannot obtain financing through any other resource and need fast cash. They are great financing options for small expansions or marketing initiatives for companies just starting out and trying to grow their business.
loan approval amounts are generally based on monthly gross revenue deposits. Typically the approval amount ranges from 60% to 80% of monthly deposits, but in some cases we can go as high as 100%. So as an example, if you have monthly gross deposits of $100,000 your likely approval amount would range between $60,000 and $80,000, and could actually go as high as $100,000 depending on the type of industry.
Once your business receives funding, either via wire transfer or ACH deposit your business can expect a daily debit of an agreed upon amount over the course of the payback period. Our daily program would be calculated based on a 5 day business week schedule not including holidays. If your business qualifies for a weekly program then you can expect a one time weekly debit for an agreed upon amount over the course of the payback period.
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 business 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 have changed significantly, even if the actual report does not reflect those changes.
Second, negative items in a credit report 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 a credit report but allows a business owner the opportunity to keep building the 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 calcualate our loan approval amounts considering a company’s overall financial strength and not solely an owner’s credit history. Financial health of a company might include something like recent reviews online or a change in cash flow patterns. Our experience after more than a decade in business funding 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 to pay back the borrowed funds. We have a modern approach to understanding borrowers, companies, and financial risk.
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 is that borrowers today are much less credit worthy than in prior years. It has recently been reported that 1 in 3 Americans has a credit score of less than 620. 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 this recent article about why small business owners cannot obtain loans from banks.
Before you apply it is a good idea to learn about some of the most important factors we consider when looking at an application for funding. 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. The better your credit history the more likely you will be approved with better rates and terms. In addition to credit history, we look at time in business, positive and negative banking data, cash flow, and several other important factors. Any opportunity to improve your application information will help you become eligible for better rates and terms. Here are some of the important pieces of information we consider:
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 small business failures, a large number of small businesses close their doors solely because they run 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 for 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.
Advantages of Shield Funding Bad Credit Business Loans
– Jane, Collectibles Retailer
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.
– Robert Martin, Owner of Polynesian Hair Design and Tanning
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”.
– Joe Mullaney, Owner of Mullaney’s Tire Center
I have been working with Shield funding for years now. They always provide my company with time funding at great rates and my overall experience with the company has been excellent.
– Comfort Noi, West African Products
Shield Funding has always been there for my company when I needed quick access to capital. I have always received fair rates and terms, and there are never any hidden fees. They are always straightforward, professional, communicative, and there for me when I need them.
– Elena Desantis, Mario French Cleaners
All I can say is that Shield Funding is an honest company that has provided my business with very fair funding options every time my business runs into a cash flow problem. It has been a great experience working with them and I would never go anywhere else.
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.
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.
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 a business owner. We have a wide variety of bad credit 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.