How to Finance a Business Purchase With Fair to Poor Credit
Finance a Business Purchase
With Fair to Poor Credit
Do you want to finance a business but you've had some credit challenges? Read this article to learn how to finance a business purchase with fair to poor credit.
How to finance a business purchase
There are 30.2 million small businesses in the US. Many folks prefer to own businesses because it gives them the creativity and profitability they have always dreamed of.
If you have student loan debt or a business venture that failed in the past, you may have poor credit.
You may also, however, find yourself with the opportunity to purchase a business that would be a great fit for your skills and experience.
If you are wondering how to finance a business purchase with fair or poor credit, you are not without options. Here are some ways to finance the purchase of the successful business you have always hoped to own.
1. Check Over Your Credit Report
Your own credit may not be as bad as you think. There may be payments that were not recorded, so you can contact companies with proof of payments.
You can also get your score back up by paying down some debt gradually. This may involve getting a second job for a little while, or finding another way to supplement your income.
2. Meet With A Small Business Administration Counselor
You can make an appointment to present your entire plan to a Small Business Administration (SBA) counselor.
They can give you tips on how to improve your plan so it better suits what lenders are seeking. The lender will also already have existing relationships with SBA lenders.
When you visit your counselor, it is important to make your plan look as professional as possible. Demonstrate how your business has been profitable and why you are capable of running it. Highlight the profitability of the business you want to buy, as well as its future growth potential.
When applying for a loan from anywhere, you must fill out an application. Bringing supporting documentation and dressing professionally will also help you.
3. Get A Microloan
If you can't get a loan from a bank, look for investors within your network, as well as micro-lenders.
Microloans are specifically designed for those who can't get loans elsewhere, and the SBA guarantees them. The downside is that interest and fees are higher. There is also a credit limit of $50,000.
4. Get A Bad Credit Loan
Many banks give out bad credit loans. While they initially come with a higher interest rate and fees, many lenders will renegotiate if you are making your payments on time.
5. Borrow Against Your Home
If you are certain that the business you wish to purchase will be successful, you may be able to get a loan from a bank by using your house as collateral. Take out a second mortgage or take out a home equity line of credit.
6. Who You Know
Your family and friends won't ask to see your credit report if you can convince them your business will be successful. You can ask them for funding and talk about their involvement in the future of your business.
7. Government Financing
Some federal and state government programs will finance your business if you meet certain criteria. You may be a veteran or involved in certain types of research. Depending upon your business and situation, they may not even require repayment.
How to Finance A Business Purchase With Fair to Poor Credit
If you have found the company of your dreams, you may be wondering how to finance a business purchase even if your credit isn't great. With a little homework and the right connections, you might find yourself the owner of a profitable business in no time.
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