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Your ability to get commercial loans with bad credit may depend on how well you present your loan request to the lender. When your credit is need of repair, you have to take steps to repair some of the damage. To get your request approved, you may have to settle for a loan that does not have the most attractive terms available. However, there are some alternatives if you feel that the loan structure is not acceptable.
Create a Business Plan
Before you approach a lender for a commercial loan, you should create a business plan. By presenting this plan to your lender at the time you apply, you will be able to clearly define the reason you require funding for your business. You can also address any credit problems that require an explanation. Here are some areas to cover in your business plan:
- Description of your business
- Marketing strategy
- Financial information
- Long and short term goals
The more in depth your business plan is, the better your chance of receiving an approval for your commercial loan request. Showing a lender your vision for the business will not only help them to arrive at a loan decision, it may get you a more favorable loan package.
Contact Your Creditors
If you are late on some credit payments, contact each of your creditors and arrange a repayment plan. This will help your credit rating, and show any lender you approach that you are working on a solution to your credit problems.
The repayment plans must be met to start re-establishing your credit history. If you are not able to make a payment, contact the creditor and see if they will give you a short extension. Ignoring the problem may force your creditor to take action in order to recover the debt you owe.
Shop Different Lenders
If you meet with resistance from a particular lender, there are many sources you can try for your business funding. Outline exactly how you will use the loan proceeds, and if you receive an offer that is less than the amount you need, consider taking it and then use the funds as efficiently as possible. Some sources you can try include:
- Local Credit Union
- Commercial mortgage companies
- Private money lenders
- Family members or friends
Your credit may prevent you from obtaining a loan that has the best terms available. You will have to decide the best loan to take in the case of multiple approvals, so be sure the loan you choose will not put a burden on how you run your business.
If you are unable to receive funding, find out the reason for the denial. If a lender requires further credit repair, or a larger down payment to reduce their risk, you can consider taking on a partner to help you gain an approval. They will have to go through the application process, and if they are approved you can stipulate that you will take back full control of your business once the loan is paid in full.
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