Getting a small business loan for women with bad credit is not a simple task. In fact, whether you are a male or female whether your business is a sole proprietorship,
limited liability or a corporation, you will still be required to use your own personal credit background if your company has no established credit history.
There are steps you can take to help you obtain a small business loan with bad credit by separating your own credit history and establishing your company's own credit profile. First, incorporate your business and obtain a EIN number (This will protect your business from your personal creditors). Second, open up a business checking account. Finally, ask a family member, friend or business partner to co-sign. Also, if you own your own home you may be able to use the equity in the home to secure a loan for your small business.
Government agencies such as the SBA or Small Business Administration may also be able to help women seeking small business loans with bad credit. They help find and back low-interest loans to small business owners who may not qualify for traditional commercial loans. Before applying for a business loan with the SBA you should be prepared to answer the following questions:
1) Why are you applying for this loan?
2) How will the loan proceeds be used?
3) What assets need to be purchased, and who are your suppliers?
4) Who are your creditors, and what other business debt do you have?
5) Who are the management team members?
Either as a separate document or as part of the loan application, you will likely need to provide some personal background information, including names used, previous addresses, educational background, criminal record, etc. You may also have to provide some evidence of business experience or management, particularly for loans that can be used to start a new business.
As part of the application process, your lender will obtain your personal credit report. However, you should obtain a credit report from all three major consumer credit rating agencies before submitting a loan application to the lender. Blemishes or inaccuracies on your credit report can hurt your chances of getting a loan approved. If you are already in business, you should be prepared to submit a credit report for your business.
Before applying for a small business loan, you will also need to provide the following information:
1) Most loan programs require applicants to submit business and personal income tax returns for the previous 3 years.
2) Many loan programs require owners with more than a 20% stake in your business to submit signed personal financial statements.
3) You may also be required to provide projected financial statements either as separate from, or as part of your business plan. It is a good idea to have these ready and prepared in case a program for which you are applying requires these documents to be individually submitted. Forms that may be used to prepare your projected financial statements include a income statement, balance sheet, bank statements, and cash flow statements.
4) Many loan programs require one year of business and personal bank statements to be submitted as part of a loan package.
5) Most loan programs require details of a businesses most current financial position. Before you begin the loan application process, make sure you have accounts payable and accounts receivable.
6) Substantial collateral is required for loans involving higher risk factors for default. Strong financial statements and business plans can help you avoid putting up collateral. In any case, it is a good idea to prepare a collateral document that describes cost/value of business or personal property that will be used to secure a loan.
7) Depending on a loan's specific requirements, your lender may require you to submit one or more legal documents. Make sure you have business registrations and licenses required for you to conduct business, copies of contracts you have with any third parties, articles of incorporation (if applicable), commercial leases, and franchise agreements. Make sure required documents are accurate and orderly. All information you provide will be verified by the organization guaranteeing the loan and your lender. Misleading or false information will result in your loan being denied.
For further information on the services the U.S. Small Business Administration offers, please visit their website at sba.gov. Another good source for women seeking bad credit small business loans is business.gov which is the official portal of the U.S. Government aimed at helping businesses.
If you still are not able to get approved for a unsecured small business loan, then ask your local bank if they will issue you a secured business loan to help you establish a credit history in your company's name.
A good source to help you obtain a unsecured bad credit business loan is with prosper.com that accepts credit scores as low as 520.
Although all information has been written in good faith and reviewed, please email us at firstname.lastname@example.org to report any inaccuracies. Please check with lenders for current credit criteria. We can not guarantee small business financing.