Starting a business is never easy especially if you have a bad credit rating. Applying for a loan, after all, is necessary to get funds for your entrepreneurial debut. Having bad credit ratings, however, is not enough to ruin your chances of getting that much needed financial assistance to start your business. In fact, you can still get funds via bad credit business loans:
Secured bad credit business loans
The two types of bad credit business loans are secured bad credit business loan and unsecured bad credit business loan. Between the two, a secured bad credit business loan features lower interest rates and higher loan amounts. You will also find it easier to negotiate a stretched payment term because the security counters the risks involved in the loan. The only drawback to this type of bad credit business loan is that it is secured against the equity of a property, which you can lose if you fail to repay your debt.
Unsecured bad credit business loans
The unsecured type of bad credit business loan, on the other hand, is not secured against anything. With this type of bad credit business loan, you are free from the possibility of losing your property to the lender in case of a default. Like secured bad credit business loan, however, an unsecured bad credit business loan also has its share of disadvantages. Because it is independent of any form of security, an unsecured bad credit business loan is coupled with a higher risk. To counter this high risk, lenders will charge high interest rates and impose strict loan policies.
The two types of bad credit business loans both have their strong points and weak points. You have to evaluate each one very carefully before making your choice. It is also important for you to choose a lender that is affiliated or associated with any of the three credit report agencies, so your efforts in managing your bad credit business loan will be reflected in your credit report.