How Can I Get a Loan to Start a Business with Bad Credit?

Sometimes, people underestimate the importance of their credit. They tend to disregard paying their loan and credit card debt, which gives them a bad credit reputation. While others do not care if they have bad credit, future entrepreneurs who have bad credit will have to think twice about this. If you are an aspiring entrepreneur who has bad credit, then getting a loan for your business can become a difficult task.

If you are wondering on how and where to get a loan, then here are some tips to help you get that loan.

LOOKING FOR A HIGHLY-RECOMMENDED SOURCE OF CAPITAL?

Finding the right source of capital for your business can be difficult, especially if you have a bad credit. You might find yourself at a lost as to where you should apply for a loan. Even if there are many options to choose from, having a bad credit can limit these choices. However, you need not worry anymore. With Loan Advisor, you can expand your search for a moneylender or bank in Singapore. The website can help match your needs with the best moneylenders and banks in Singapore!

1. .SECURE A BUSINESS LOAN FROM A BANK

You may be aware that banks are stringent and strict when it comes to loaning money. Banks are highly careful and particular to those people who have bad credit. However, if you want to give it a try, then you have the option to do it. Remember that banks in Singapore will scrutinize your loan application. Before you apply for a business loan at a bank, you must consider these factors first:

• Do you have a clear business plan?

Convince. Convince is the word that you must do when you are presenting your loan application. Show the bank that you can pay back the loan by presenting a detailed business plan. If you are selling a product, then show the bank that it can become profitable in the future. With the help of their loan, provide the bank with a detailed structure on how beneficial their loan can be.

• What is their credit score requirement?

Compare your credit score with the credit score requirement of the bank. If your credit score does not pass with the bank’s requirement, then it can become impossible to get a loan from them. If you want to get a loan from a bank, then you can either find a bank that has a lower score requirement or you can improve your credit score.

2. FRIENDS AND FAMILY

Where better to borrow money from than the people you trust the most? Some entrepreneurs were able to launch their businesses successfully because of the collective efforts and capital from the people they know and trust. While it may feel embarrassing to borrow money from them, but if you have no more options, they may be able to help you. Borrowing money from a bank while you still have a bad credit gives you a slim chance of being successful, but borrowing from friends and family can give you better chances.

3. SETTING YOUR HOME AS A COLLATERAL

A home-equity loan is a highly-risky option of getting a loan for your business. While this option has the advantage of giving you a low-interest rate, failing to pay back the money on time can result in the foreclosure of your home. Remember that starting a business has risks, by setting your home as collateral, you are adding more risks and pressure to yourself. Before you do consider this option, you must make sure that you have a clear business structure and plan to ensure the success of your business.

4. BORROWING FROM A MONEYLENDER

Moneylenders have the advantage of being less stringent with the requirements. Like banks, they may require to see your credit score, credit history, and other requirements. However, this might not always be the case. Some licensed moneylenders can be lenient in spite of your bad credit, and they can grant your loan almost immediately.

There are moneylenders in Singapore who can grant your loan. However, be careful when you are making a loan with a moneylender. Make sure to transact only with licensed moneylenders and consider their interest rate and practices if it is indeed compliant with the law.

GETTING TO THE ROOT OF THE PROBLEM

Banks and other financial institutions may be refusing your loan request because of your bad credit. If this is the case, then it may be the time to improve your credit history and score.

1. IMPROVING YOUR CREDIT SCORE AND HISTORY

Your bad credit score may be the result of having debts that you did not pay. These debts can range from credit card bills to loans. Whatever the reason may be, failing to pay a debt is the reason why people can have bad credit.

If you want to improve your credit score and history, then here are some ways to do that.

• Pay your loans and bills on time by setting a reminder
• Negotiate with your bank to help settle your debt
• Avoid overusing your credit card
• Stay updated and current with your bills

2. DEBT CONSOLIDATION PLAN

You may have heard of this kind of strategy. Debt consolidation involves loaning a large amount of money to cover most or even all of your outstanding debt. This plan is an easier way to make payments, as you only need to make a single payment every month. However, take note that the debt consolidation plan is only effective if you do not incur any more debt.

LOOKING FOR A HIGHLY-RECOMMENDED SOURCE OF CAPITAL?

Finding the right source of capital for your business can be difficult, especially if you have a bad credit. You might find yourself at a lost as to where you should apply for a loan. Even if there are many options to choose from, having a bad credit can limit these choices. However, you need not worry anymore. With Loan Advisor, you can expand your search for a moneylender or bank in Singapore. The website can help match your needs with the best moneylenders and banks in Singapore!