Guaranteed Approval Loans for Small Businesses in the USA
There is one area of the lending market that is often hidden under the rug – bad credit business loans. Borrowers are wary of loan sharks and some lenders (mainly banks) immediately dismiss borrowers who have a bad credit history. You may have found this article wondering what are the best bad credit loans with guaranteed approval? Well, guaranteed approval might be jumping the gun but the good news is that there are solutions out there.
There are a number of ways you could have found yourself seeking a bad credit business loan – perhaps a director with a strong credit history has recently left your business but cash flow in the business is strong, perhaps you have a brilliant business idea but are limited in progressing it due to your credit history or perhaps your credit history is checkered but you have assets you can use to act as security to a loan. If you’re a homeowner then this can definitely work in your favour.
We can also flip the scenario – perhaps you’re just looking for the best guaranteed loans as your business is encountering cash flow difficulties but you have a good personal credit history. If this is the case it might be worth exploring personal loan options. In this article we’ll review if there is such a thing as guaranteed business loans? Or if there are guaranteed business loans for startups? And even bad credit startup business loans with guaranteed approval? We give our honest assessment of it all.
“Best Guaranteed Loans” – Is There Such Thing as Guaranteed Approval Business Loans?
No company can guarantee that they’ll be able to provide you with a business loan and any company outright advertising “guaranteed business funding” you should approach with caution. Every single business and owner behind them is unique and has its own cash flows, profit and credit history. Therefore every lending decision should be unique as well, making it impossible to provide “business loans for bad credit guaranteed’.
It’s all about stacking the odds in your favour and whilst you may not be able to attain guaranteed business loans, your best bet is finding a lender which is familiar to lending to businesses in your situation. You’ll be able to identify the right lenders depending on their borrower requirements. For example if you have bad credit you might prefer a lender which conducts no credit check or has a low credit score requirement. It’s not just a case of this varying from lender to lender either – some online lenders conduct no credit checks for some of their products whilst they do on others. This is generally linked to whether they are providing secured or unsecured financing.
Before applying for any finance it’s important to understand your credit score. Once you know this you can match it up to the minimum credit score that lenders would like to see from their borrowers. Most online lenders in the USA use the FICO credit score system. Providing you meet the minimum score requirements and any other stipulations they set – such as being a US registered business and a certain amount of months trading history – then you’ll be good to apply. Often, you only need to input basic company details in order to speak to a finance expert and this won’t harm your credit score. It’s always worth checking with the online lender at what stage, if any, your credit score will be impacted as a result of applying.
Best Bad Credit Loans “Guaranteed Approval”
As we’ve already stated, you can’t find the ‘best bad credit loans with guaranteed approval’. There are no such thing as guaranteed lenders for bad credit but from our research these firms have some of the lowest credit score requirements and provide the highest chance of being approved for borrowers with poor credit:
In order to apply for finance with Fundbox, a minimum personal credit score of 500 is stipulated – the lowest of any provider we’ve been able to find (not including providers who conduct no credit check – more on this later). That means it’s very much open to those who fall into the “very poor” credit category. In addition to this, Fundbox asks that your business has been operating for at least three months and you are registered in one of the 50 United States. Very good indeed – asking for just three months of trading history is one of the lowest ‘time-in business’ stipulations we’ve been able to find as well. To put this into comparison, some lenders prefer that you’ve been operating for at least three years.
If you also factor in that applications can be automated by synching up your bank account, you’re left with a very fast application time. It’s worth noting a Fundbox application has no impact on your credit score either. All making Fundbox a very good place to start your search for a bad credit business loan.
If you’ve been searching for bad credit loans with guaranteed approval from direct lenders then as we say – we can’t help you find any provider with guaranteed approval – but Fundbox is a direct lender that accepts bad credit.
Bluevine is a very well respected online lender that asks for a 650+ FICO and three years of trading for its line of credit but a much more moderate three months in operation and 530+ FICO for its invoice factoring product. If you’re a B2B business that has unpaid invoices and is struggling with cash flow then invoice factoring is likely for you. Bluevine will forward you 85%-90% of the value of the invoice as you issue it, with the rest following up when your customer pays its invoice on the due date (less Bluevine fees).
It can be a great option for businesses who lack assets to secure a loan as your customer’s unpaid invoices act as collateral in the lending process. And unlike a traditional loan, there is no repayment schedule to worry about – the finance is paid off as your customer pays their invoice. Deciding which invoices you want financed is completely down to you.
Lendio isn’t a direct lender, it’s a lending marketplace. Meaning after you input a few basic details about your company and funding requirements you receive multiple loan suggestions that you are likely to be approved for. Lendio asks borrowers to have a minimum credit score of 550 – still falling within the ‘very poor’ credit category. Whilst it’s a slightly higher benchmark on your credit score than Fundbox it can pull together four or five different lending options for you. If you’re genuinely indifferent on who funds your loan and just want to be directed to lenders who will provide you with a small business loan with easy approval then Lendio is for you.
In Lendio’s own words, loan applications with traditional lenders are approved around 20% of the time, whilst applications through a lending marketplace are approved around 65% of the time. It’s all about stacking the odds in your favour. The marketplace works with over 75 direct lenders and an application can be completed in as little as 15 minutes.
“Guaranteed” Business Loans for Startups
As there is no such thing as guaranteed business loans, unfortunately the truth is that you definitely won’t be able to find guaranteed finance approval for startups. As a startup you’ll have to get creative in the finance you seek – see our startup business financing article – including suggestions on:
- Credit Cards
Citi, Amex and Discover all offer interest free welcome periods of 12-15 months. Be sure to know when your interest free period is due to expire. A good solution if you only require a smaller sum to get started.
- SBA Loans
Generally, SBA-backed loans are only for established business but there is one notable exception – the SBA microloan program. The average SBA microloan is roughly $13,000 and attracts an interest rate of 8-13%.
- Personal Loans
Suitable for just a small amount of money for things like early launch activities and initial small stock purchases. Could be costly if you have a poor personal credit history.
- Peer-to-peer Loans
There are some well known US Peer-to-peer (P2P) lenders, such as Prosper, that are accessible. You won’t find guaranteed startup business loans on a P2P exchange but it’s worth exploring.
- Friends & Family
If you are in a fortunate enough position to have the support and belief from those around you then this can be your best bet. You’ll want to be absolutely sure you can afford to repay the loan though.
You can raise cash either via equity crowdfunding or offering your service/product to early stage investors. This can be a great route for niche businesses offering something unique – vineyards, spa’s, event companies.
- US Government Grants
The SBA is a good place to start your search for grants as well as SBA loans. You’ll also find grants from your local municipality, state, and at a federal level. Lastly, what if you’re seeking bad credit startup business loans with guaranteed approval? Startup business loans can be difficult enough to attain as it is and having a poor credit history is only going to make it tougher.
When you have bad or no credit it will be most difficult of all to attain unsecured financing – that is finance you’re not securing with any business assets or your home for example. Funds you would use on marketing, business development and payroll. So if you’re starting a new venture with poor credit you may be able to pull the required liquid capital you need from various personal sources and then look for financing for hard assets that can be used to secure a loan.
If you believe in your vision you may be able to pull enough funds together through a mixture of friends & family, personal credit cards and the cash you have at hand. Then turn to other sources of secured financing if you can – equipment finance for example if machinery/vehicles are key for your business. Or, if you’ve been able to secure some early deals from reputable customers, invoice finance could be a great option. If you’ve managed to make some early sales in a B2C business then perhaps a business cash advance is available to you. In 99% of cases business cash advance companies do not conduct a credit check.
As we have stressed, there really is no such thing as guaranteed business loans for startups or guaranteed business loans for bad credit – in fact, there is no such thing as guaranteed business loans period. There are however a number of avenues to explore such as Government grants, personal loans and online business loan companies. Online lenders will be significantly more likely to provide you with finance than banks. You could apply straight to a direct lender but working with a lending marketplace will give you multiple solutions provided by lenders who are used to working with bad credit businesses. Just be aware, no matter which lender you choose, you can expect to pay higher interest rates if you have a poor credit history.