Running a business requires capital, and capital is more than just money. Specifically, it is the money you invest into your business to keep it running. If you are not making enough money to keep your business afloat, you have a couple of options. You could close down your business, downsize your business, or get a loan. A loan is a great way to keep your business growing while you work on making more money. The money from your loan will act the same as capital; you invest it into your business, and as the investment pays off, you pay back your loan. However, if you need a loan, it could mean your business has been struggling for a while. Alternately, it could mean your business is just getting started. Either way, you will likely have bad credit or no credit at all.
Bad Credit or No Credit
If you have bad credit or no credit, you need someone who will provide you with bad credit business loans. Far too often, banks and other non-bank lenders will not offer loans to those who have bad credit or no credit whatsoever. However, there are ways around this. If you or your business has bad credit, you can still get a loan; you just need to have collateral.
Collateral
Collateral consists of items of worth that can be used to secure a loan. For example, if your business has valuable equipment, you can use the value of that equipment as collateral for your loan. If you do not pay back your loan, the lender will own that equipment. They’ll use the value of that equipment to get back the money they lost on the loan you could not pay. However, many lenders will also offer you a loan without collateral as well. If you don’t have collateral but you still want a loan, you will likely have a different payment plan.
The payment plan for a loan with no collateral will likely be much shorter. The size of the loan will likely be smaller as well. Initially, your loan will be much shorter, but you’ll be able to grow it over time. As you pay off your small unsecured loan, you will grow your credit. Such growth will make it easier to get a bigger loan in the future.
Repayment
There are several different types of payment plans. A short payment plan is usually reserved for those with the worst credit or with no collateral. If you get a payment plan of 24 or 36 months, you’ll have some time to grow your business to pay off your loans, which will make it much easier to grow your business and expand your credit score.