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Do you need a good credit score to get a business loan?

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A business loan is a loan specifically intended to help you to grow your business. As with all loans, it involves the lending of funds which is then repaid with added interest. You’ll need a business loan if you don’t have the capital to invest in your business yourself. Generally, a business loan helps you to either start or grow a business. Business loans also come with either a fixed or variable interest rate, and can be either secured or unsecured loans.

If you’re looking to grow your business, you’re probably looking to find out what’s involved. We’ve put together this handy guide so you’ll know exactly what you will need.

Do I need a credit check to get a business loan?

If you’re applying for a business loan, you are probably wondering if you’ll need to complete a credit check. The short answer is that yes, you will. For any type of loan, a credit check will be necessary. However, if your credit score is not where you would like it to be, do not stress.

Even if your credit score is on the lower side, there are options available to you. Bad credit loans are one such option and are not nearly as scary as the name suggests. These can be a good option if you are looking to start a business, or grow your existing one. Although they do come with higher interest rates, bad credit loans can be a good way to take your dream business further.  Secured business loans are also available, although they can be risky as they use your own assets as collateral. 

If you are concerned that your credit score could hold you back, keep reading as there are plenty of options available to you. 

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Bad credit Business loans

When you begin to apply for a business loan, your business’s credit history is one of the most important factors that your lender will look at. It gives lenders an idea of your business’s financial performance and your history of being able to manage business financials.

If you do happen to have bad credit, it can result in a loan application being denied. However, this does not mean that you cannot secure finance. That’s where a bad credit business loan comes in.

If your credit score falls below 600, it is still possible to get a business loan. Loans called ‘bad credit loans’ exist for this purpose. Don’t let the name put you off. They are made for people who fall below a good credit score, but who need a loan in order to get their business set up. Bad credit loans are generally short term loans that have a high-interest rate attached to them. Having a bad credit history does present a risk to lenders. Therefore, interest rates will usually be higher than other forms of finance. In comparison to banks, many lenders will offer bad credit loans if needed.

Bad credit loans are not just for people who cannot meet the credit score criteria. If you already have a small business, you may not meet the profit criteria for a normal business loan. This is where a bad credit loan can help you out. Although you will be paying a higher interest rate, you will be able to receive the funding that you need in order to grow.

Secured business loans

If a bad credit loan does not sound right for you, fear not. There are still at least two options available to you as you can also apply for a secured business loan.

A secured business loan is secured by your personal assets. This means that any items you own, such as property, a vehicle or funds in your savings account can be used as collateral. In the event that you are unable to pay back the loan, your collateral items would be sold, and the profits would be used as repayments. Although this may sound like a high-risk option to take, a secured business loan means that you have greater borrowing power, as opposed to a bad credit loan.

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Alternative financial lenders For Business Loans

Many small business owners are turning to alternative financial lenders, rather than the traditional route of banks. Alternative lenders are usually able to provide smaller, shorter-term loans even to those with bad credit. In some cases, your credit score may not be the deciding factor in whether or not you can be approved for a loan. Rather, your ability to show that your business can pay back the loan can be used as a deciding factor. Alternative lenders may also be able to tailor your loan repayments to work with your financial situation in some cases.

As they have more flexible lending power than a bank, the application process usually much quicker. In some cases, you can be approved on the same day. If you would like to build your business without putting up your assets for collateral, an alternative lender may be the right answer for you.

Where Does Tiger Finance Come In?

With Tiger Finance, we can get you a loan in four easy steps. You’ll have a free consultation with one of our specialists, and we will tailor-make you a loan. We’ll negotiate with lenders on your behalf before you’re approved.

We’ve helped countless Australians with both good and bad credit ratings to get funded for their dream business. We understand that lending criteria from other lenders are too strict, and can stop you from achieving your goals. That is wrong, and it shouldn’t hold you back.

How We Can Help

Our finance specialists can help you find the right business loan for your project. Business loans can be a complicated topic, and that’s where Tiger Finance can help. We will find a loan that makes your dream project that much easier.

If you are one of the many Australians finding getting a business loan difficult, Tiger Finance can make the process simple and pain-free. Call us today to speak to one of our loan experts. 

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