Can I get a small business loan with bad credit? - Letsdiskuss
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Sophia Williams

Digital Marketing Manager | Posted 11 Dec, 2018 |

Can I get a small business loan with bad credit?

Manish Seo

S E O | Posted 10 Jan, 2020

ramesh h

finance professional | Posted 08 Jan, 2020

Bad Credit is always a problem for Small Business Loans. There are few NBFC's like Lendingkart that offer small business loan within 3 days of approval. Such loans helps an entrepreneur expand or manage his cash flow in the company.

james peter

Employee | |Updated 14 Aug, 2019

Hi, Yes there are financial providers in the market who can offer you a loan even for bad credit score. But the interest rate may be not as per your expected and it will be reasonable interest rates. Look for the best regulated licensed lenders online and apply for it for a hassle-free process and assure them for repayment on time without fail. 

Riya Sharma

Accountant | Posted 12 Aug, 2019

it might be difficult as impossible, A bad credit score indicates that you did not repay your loans and no institution will be able to provide the loan to such kind of person. Get consult with Top CA Firm to manage your credit score 

peter radcliffe

financial Advisers | Posted 10 Aug, 2019

yes, you can get a small business loan with bad credit

These following steps will help you 

1. Search for the Lender

Search for a lender who provides small business loans on bad credit. Everyone has its own criteria regarding credit score. Find the right lender for your loans.
2. Business Plan
Explain your business plan to the lender. Convince them about loans your business plan and repayment. If your business plan is good and all details regarding loans, then the lender will approve your business loans
3. The high rate of interest
If you have a bad credit score and taking a loan, then you have prepared to pay a high rate of interest.
4. Ask Family or Friends for Money
Ask your family and friends for loans about your business. Take a small amount of loans and repay it on time.
5. Pay Your Bills on Time
Pay you all remaining bills on time. 

Avichal Singh

Project Manager at The Economic Times | Posted 18 Feb, 2019

Loan is not supposed to be given to somebody who cannot give it back. Bad credit score indicates that you have been a defaulter in the past, therefore it’s not very easy to get a loan from banks.

Everybody loves a cheaper loan. But, there are no fixed interest rates for unsecured loans. The rates vary according to the borrower’s ability to repay and his credit profile.

Loan is a one of the major businesses for lenders, hence they can take risk. But there are some institutions who are willing to disburse small amount of loan to anybody basis on your ability to repay.

CIBIL data says 80 per cent of the loans that get approved have a score above 750.However, credit score is not the only parameter which lenders look at for approval and deciding the interest rates.

The difference in the interest rate paid by someone will vary depending on the product (secured or unsecured loan), size of the credit and the payback tenure. The difference will be bigger in case of unsecured loans than secured loans.

It is important note here that a person with no credit history will be treated differently from a person with credits defaults as the reason of poor score.

If your score is low because of default then chances of getting a loan is lower. But if the score is low because of less amount of loan taken or because credit history is relatively recent then you can still get the loan.

Where to go for loans with poor credit scores?

NBFC: Typically, non-banking financial Institutions (NBFCs) are more flexible with credit scores and the cut-offs than banks. NBFCs have disbursed loans for a credit score as low as 360.

P2P: Peer-to-peer (P2P) is a crowd-funding model, which is largely online. This is a platform where people invest their money with people who want to borrow without any interference of any financial institution.

P2P loans are catching the attention across metros. Easy and quick disbursements are not the only drawing points for P2P companies. The rate of interest offered on the online lending platform is another major draw.

P2P companies offer unsecured loans for tenures of 3-36 months at interest rates anywhere between 12 per cent and 28 per cent. The rate of interest is decided mutually between the borrower and the lender. P2P platform acts as a mediator between the two parties.

The P2P industry is about three years old in India and got its first set of regulations in October. RBI is in the process giving licenses to companies subject to conditions mentioned in the official circular. All licensed companies are liable to contribute data to credit bureaus for better credit evaluation of the borrowers.

Banks: Considering a deep need and potential of SMEs, some banks have started a new division for small business loans. They have a team of experts, who will evaluate your business before disbursing business loan. But you have a fair chance to get a loan approved there.
For your convenience here’s a Loan EMI calculator

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