SBA LOAN PROBLEMS: DO SMALL BUSINESS LOANS HELP?
We provide people who are facing an SBA loan default with solutions. We analyze SBA loan problems and provide solutions such as an SBA offer in compromise.
The honest truth is this: having a bad credit score doesn't mean it's all over for you!
If you're an entrepreneur with a less-than-average credit rating, you are still able to secure yourself a loan, it may just take a little extra leg-work.
Small Business Loans with Bad Credit
However, there will be a few hurdles to clear, such as a higher interest rate and proving your reliability to a lender.
Securing small business loans with bad credit just means you need to know where to look - and large, commercial banks are not the place.
In this blog, we outline the parameters of bad credit and the types of small business loans you could qualify for, even with a bad credit score!
https://youtu.be/YAl5Y9CZVvw
The reality is that if your personal credit score is below 650, you will not be able to secure a business loan from most major banks.
Large banks which qualify at having over $10billion in assets are known to reject 3 out of 4 business loan applications.
Many are notoriously frugal when it comes to lending, most especially if your credit score leaves little to be desired.
The government operated Small Business Administration (SBA) offers small business loans with bad credit.
Government support of the SBA allows them to take bigger risks on who they lend to, making small business loans with bad credit a possibility.
But ultimately, if you aim at starting a business with a bad credit score, you are unfortunately at a disadvantage.
In order to secure any form of financing for your start-up, you have to rely on a personal credit score -- a portal into your financial history.
Even if your business has taken off and established its own form of credit, lenders will still look into a personal credit score.
Despite the limitations of a bad credit rating, all is not lost! Small business loans with bad credit are not out-of-reach.
Basically, your credit score is a number which reflects how reliable you are as a borrower of money.
The higher your credit rating, the better your chances of securing a business loan.
One of the easiest ways get into borrower's ''bad books'' is by failing to fulfill credit responsibilities.
Some of these include skipping repayments on a loan, late payments on a loan, failing to pay back credit card debt, filing for bankruptcy and more.
Typically, credit scores range from 300 - 850. If your credit rating sits below 620, you score is considered undesirable to many lenders across the board.
But there are still ways and means of securing a small business loan with bad credit.
In order to get the ball rolling on your loan application, you must present a lending institution with the following:
These documents are used to prove your reliability as borrower and are an important part of a lender's decision-making process.
Here are the different types of loans available to those with a less-than-average credit rating...
These types of loans operate the same way as bank loans, only they are not granted by traditional banks.
Alternative types of lenders will offer microloans, such as the Small Business Administration or a credit union.
Typically, the size of the loan granted is much smaller than those offered by traditional banks, hence the term microloans. An amount of $50,000 or less is the standard amount.
Opening a credit card in your business's name work as a double whammy.
With a business credit card, you're able to spend money on your business, and improve your credit score when making regular payments on the credit card.
With a business credit card, you're offered a continuous line of credit, allowing you to pay back as you spend.
However, it is important to stay on top of monthly balance payments, otherwise, the interest incurred on this amount can add up very quickly.
This form of credit is based on projected business turn over each month. The lender will give you an advance based on future revenue or credit card sales.
This type of loan is also known as a business cash advance, and is ideal for businesses with cash flow issues.
These loans are generally offered at $10,000 or less.
FYI: merchant cash advances are loaned with high-interest rates, so you must ensure you can meet the repayments of this loan.
These loans are usually available from online lenders and are ideally suited to businesses with an established financial history.
If you're a start-up business, with less than two years' operation, you most likely won't qualify for this type of loan.
Online lenders are relatively prolific, so make sure you ''shop around'' for the best loan limit and interest rate to suit your needs.
Small business grants are worth the extra leg-work if you have to time and energy to pursue one!
Essentially, a grant is given to your business freely, without having to repay anything. However, grants can be very niche driven, offered only to very specific industries.
In order to successfully apply for a grant, certain criteria of your business will be scrutinized, including demographics, industry type and location.
If the grant is offered to your business, you are generally given strict guidelines on how and when to spend the money by the grant provider.
Failure to follow these guidelines may result in your business having to repay the money to the grant provider.
Our team at SBA Debt Attorneys is on your side. We aim to solve your SBA debt dilemmas with compassion, clarity, and professionalism.
No matter how difficult or daunting your circumstance may seem, our experienced attorneys can assist in erasing your debt.
If you have questions and concerns regarding federal agency matters, SBA letters, SBA demands and more, contact us at www.sba-attorneys.com or at 1-888-756-9969 for a FREE initial consultation.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.
The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.
Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.
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