I recently filmed a video on how to get unsecured business loans with bad credit, but wanted to expand on it a bit because of some good questions that came up.
Most of the time, people are referring to PERSONAL bad credit, not BUSINESS bad credit. So the answer is simple: if you have bad personal credit, all you need to do is build good corporate credit to get unsecured business loans. If you set up your corporate credit correctly, your personal credit shouldn’t be a factor. Unsecured business loans would follow the same requirements as a construction loan. Typically it would be handled as a bank line of credit and the current lending criteria for such a bank loan would be: 12+ favorably reporting trade creditor accounts with a minimum 6 month payment history on those accounts. Also, a PayDex score of 80 and two years in business from the date of incorporation.
But there is another, more creative solution to this problem. If the small business owner had built perfect business credit from scratch, as I teach, in 12 months he would have purchased multiple cash credit cards. What are cash credit cards? Visa, Mastercard, Discover, AMX. This is opposed to the sale of credit cards such as: Home Depot, Officemax, etc.
Do you see where I’m going with this? If you have an unsecured business credit card with a credit limit of $50,000, isn’t that basically a bank line of credit? Of course it is. And it’s much easier to access than having to go the traditional route of obtaining a bank line of credit. So, as a much faster solution to the problem, one would get business credit cards without personal guarantees, which is exactly what I teach in my free 5-day eCourse for small business owners. If you follow my step-by-step plan of attack, you should have close to $100,000 in unsecured business lines of credit.
As a bonus, unlike personal credit, the more corporate credit is used, the better business credit becomes. You’ve probably heard that to have great personal credit, you shouldn’t use more than 30% of your available credit, right? Well, with corporate credit, those rules don’t apply. The more you use, the better your score will be.
If you found this insider helpful, I’ve put together more video tips as well as a free 5-day email course on building perfect business credit from scratch.