Before the economy went into a recession and interest rates were high, it was possible that you could attain a small business loan with bad personal credit. These days, it is still possible, but much harder to get that small business loan. Although there are possible solutions out there for a small business owner with bad personal credit to get a loan, it is important to note that there is about five times more capital available to small businesses using business credit than entrepreneurs using personal credit.
Furthermore, you might as well start building your business credit now because you will be able to use it in the future to progress your company and let it grow into a bigger and better organization. Over the last ten years, especially with the sub-prime mortgage usage, many small business owners did not really strive to keep good business credit or go out and try to build it because they did not necessarily need to have proper financials and a good business credit score to get the loan solutions that were needed. Now, however, more and more small business owners are realizing that they made a mistake because now that they need a loan, they cannot get it easily.
What small business owners in this position have found is that although it would be much easier to get a loan with good business credit, it is still possible to get a loan solution if you search in the right places. One of the best places to look for a loan if you cannot get it by traditional methods (i.e. banks, other financial lending institutions), is at the Small Business Administration’s website, SBA.gov. Here, you can find that this government-run agency will not personally give you a loan, but they will guarantee a loan for you. Once they do this, it will be much easier to get a loan because in this situation, they basically promise the lending institution giving you that loan that they will pay back your loan back to a certain percent (usually 70-90%). The most popular loan the SBA offers is the 7(a) loan and it is important to research this in the future if you want to make sure your small business can be guaranteed for a loan.
