As a small-business owner, you need access to capital to fund your business. One way to access capital is through a small-business loan. Small-business loans are typically used to fund startups or to grow businesses, to help buy inventory or furniture, to pay for marketing, or to strengthen the financial foundation of your business. However, accessing credit can be difficult for small businesses, especially those whose owners have bad credit.
According to the 2017 Small Business Credit Survey, the most recent one from the Federal Reserve, 40% of small businesses applied for some form of financing in 2017 – a modest decline from 45% in 2016. Of those that applied for financing, 82% received at least some financing, and 58% of applicants received the full amount sought.
A lack of affordable capital can negatively affect a business. Fifteen percent of businesses less than 2 years old and 7% of businesses 16 years or older reported that insufficient financing caused a decline in profits, according to a 2017 U.S. Small Business Administration Office of Advocacy report.
For business owners with bad credit, getting a traditional bank loan can be very difficult. However, alternative lenders offer multiple funding options for those with bad credit. Some of these lenders have no credit score requirements and consider additional factors, including business revenue or length of time in business.
In this guide, you’ll learn how small-business loans work and how you can find the best loan from an alternative lender to start or expand your small business, even if you have bad credit.