Business Loan With Bad Credit
Are you a new business otherwise known as a startup? Have you found that it’s super difficult to find funding for a startup with bad credit and everyone is telling you it’s impossible?
Well, that’s just someone’s opinion. You definitely can get funding for your startup even if you have bad credit. We going to tell you exactly how to do it step by step.
So, we will talk about business credit. Many of you do not know but business credit and personal credit are completely separate.
The personal credit
As you know with personal credit, there are 3 credit bureaus. You have Transunion, you have Equifax and you have Experian. On your personal credit report, you have what we call trade lines. So, if for example, you have a mortgage or auto loan, or credit cards, they will all show up on your personal credit report and they will give you a credit score based on how you’re using your credit. It’s called your credit utilization.
Another thing that’s really important on your personal credit is how long you’ve had trade lines, how well you pay your bills inquiries, and things like that. But the big thing with personal credit is your debt ratio. And the thing with personal credit is that you don’t have to use it if you focus on getting your business.
The Business credit for a startup business
So, let’s now talk about business credit. Business credit is much different.
Yes, you still have 3 credit bureaus. You have Equifax business, you have Experian business but you have DUN and Bradstreet.
DUN and Bradstreet is the number 1 credit reporting agency for businesses. You can create a profile with Dun and Bradstreet absolutely free but it is just for businesses. And the big thing with business credit that makes it much better than personal credit in my opinion is instead of using your debit ratio and your debt utilization as the big thing, they care about how well you manage your debt. So, if for example you had a thousand dollar credit on your business credit and you used $800 of it, they would not penalize you.
They instead will reward you if you make your payments on time. Because when it comes to business credit, they care about how well you manage your business.
So, number 2, if you are a startup, you need to go ahead and start the business. Meaning, you need to name your business, you need to get your business registered with the secretary of state. And that means to get an LLC an S Corp or a C Corp. I cannot advise you which one of those structures. You should choose if you need to talk to your tax professional or your attorney, please do so. But make sure you get your business registered with the secretary of state because it’s super important when it comes to actually have a business.
Once you do that, go ahead and get that EIN that stands for an employer identification number. You can go right to irs.gov and get that number for free. You also want to get a professional website, a professional phone number, and a professional email. That means you want to get an email, not like abcbusiness@gmail. You want to get an email like email@example.com. In other words, your website and your email should have the same domain.
That way people will see that you’re a serious business and you’re not using some free email account to set up your business. This is an awesome way to start showing credibility and showing that you are serious about your business and they will fund your business if you do so. The next thing that you want to do even if you have bad personal credit is to go ahead and get a business checking account. I cannot stress to you how important it is to get a business checking account. Even if you have bad credit, you can get a business checking account. See this video that teaches you how to do so.
There are tons of banks out there that can help you do that. Next, you want to go ahead and get your DUN and Bradstreet number. You can do this for free. Go to DNB.com, go ahead, and register your business there. There’s a small process where they’re going to mail you a code. You’re going to wait for that code to come in the mail. Go back to their website and then you will set up your business profile. Trust me, they’re going to offer you something where they try to sell you a thing to get you a business DNB number but do not do it.
You can get your DNB number absolutely free and start building business credit with them without spending a dime. If you’re getting massive value from this, make sure you go ahead and smash that subscribe to our blog. I’m giving you free content right here and this is amazing information that most people do not know. Let’s keep it coming.
Now that you have your Dun and Bradstreet, now it’s time to start building business credit. This is going to allow you to unlock lots of money for your business. Go ahead and start with vendor credit. If you have bad credit, you can get vendor credit regardless of your credit score. There are companies like Uline, Grainger, and Quill.
You can order things from them and they will give you what’s called invoices. Either they will do net 30, net 60, or net 90. In other words, they will let you buy their products and you will not have to pay them for 30, 60, or 90 days. But the real benefit is they report to Dun and Bradstreet. You literally can use these accounts to start building your business credit and get stuff that you need for your business all at the same time.
Once you get that vendor credit established, they will start to report those to Dun and Bradstreet and then you can move on to the next step. After vendor credit, you can start to get store credit. Literally, there are tons of stores out there that will lend to businesses without checking your personal credit score. Especially if you wait a few months after ordering those vendor credit lines from Uline, Grainger, or Quill. Those tradelines will be on your business credit report and then you can get credit cards from stores like Walmart, Costco, Dell, and many others. Including gasoline companies like Chevron and Shell.
They literally will give you business credit cards in your business’s name without checking your personal credit. You can also get secured business credit cards. When you go to your bank to get that business checking account, if you have bad credit, they will offer you the option to get a secured business credit card. This was where you will take $500 for example, you give it to the bank and they will give it to you on a business credit card. As you use that credit card, make sure you make the payments on time and also ask them which credit bureau they report to.
Most people will report to Dun and Bradstreet but some of them will report to Experian business or Equifax business. Either way, you want to make sure they are reporting. And last but not least, I’m going to share with you a super-secret new improved way to start getting business funding right now for your startup even if you have bad credit. There’s a company called Accion. that’s ACCION. Look them up. They’re a community development institution. Meaning, they’re designed just to lend to minority-owned businesses, women-owned businesses, and startups just like you. And they don’t require that you have a really high credit score.
Conclusion for a startup business loan
In fact, they will loan to businesses that only have 500 credit scores. Literally as low as 525 for some of these loans. So, check them out. Additionally, there’s one more company I know of called 5-star processing. You can go to 5-star processing and even with a 300 fico credit score, they will give you merchant processing and they will give you business loans in your business’s name.
It’s an awesome way to start getting funding for your new business even if you’re a startup. So now you know exactly how to get business funding even for your startup even if you have bad credit. Make sure you like this video. Again, comment below and let me know what it is that you’re working on. I want to make sure that I’m answering all of your questions and giving you all of the information, all of the resources, and all of the tools that you need to be successful.