As with personal loans, it’s possible to get a small business loan with bad credit—scores as low as 580. However, you’ll have to demonstrate strong cash flow, and banks are more likely to require collateral to reduce the risk of lending. Small business borrowers with bad credit also qualify for less competitive rates and pay more in interest over the life of the loan. If you have a low credit score—under 580—an alternative option like invoice factoring may be your best bet.
What documents are needed to apply for a small business loan?
When applying for a small business loan, expect to provide business bank statements, personal and/or business tax returns, business licenses and permits, proof of business registration and your business’ Employer Identification Number (EIN) or Federal Tax Identification Number (TIN).
To obtain financing for your business, you may also have to provide a business plan and copies of financial statements, including a profit and loss statement, balance sheet and cash flow statement. Likewise, expect to furnish information regarding current accounts receivable and accounts payable as well as the specifics of existing debt. Depending on your creditworthiness and the type of loan, you may also need to provide proof of collateral.
How much can I get for a startup business loan?
Startup business loans typically range from $1,000 to $250,000. However, the loan amount you receive depends on your and the business’ creditworthiness. Most lenders require businesses to have been in operation for at least six months to two years and meet minimum annual revenue requirements. Be sure to check with your desired lender to ensure your startup is eligible