Small business owners often fall victim to low credit scores due to a myriad of reasons not related to their business operations, such as divorce. While it is never advised to mix your personal and business finances due to the way in which they can impact one another, in some instances it cannot be avoided. Bad credit scores can have a multitude of negative effects, including the ability to obtain a small business loan.

Poor Credit

Lenders typically utilize your credit score as a metric in determining how well you handle your finances. If you have a low credit score, banks may make the determination that you do not have the skills necessary to manage a loan properly and pay it back on time. Businesses are held responsible to credit score guidelines, just like private individuals. The difference is that business credit scores fall between 0 and 100. A variety of factors may affect a business credit score, including your credit history, how frequently you pay your bills, and the amount of your available credit. A credit score of 75 is typically considered good. Anything less than 75 could make it more difficult for you to obtain a business loan or could result in a higher interest rate for bad credit business loans. Personal credit scores can also be used for obtaining business loans, but you will need a score that is around 800 in order to secure such a loan.

So, what do you do if you have bad credit scores and are not able to obtain a traditional loan as a result? Alternatives to small business loans in Philadelphia are still available if you have a bad credit score. In fact, a local or community bank is often a much better option for obtaining a bad credit business loan over a nationwide bank. This is because local banks are often more willing to overlook a bad credit score.

Alternatively, 48 Factoring Inc. also caters to small businesses which have been existing for at least a year and have generated more than $100,000 in revenue over the previous 12 months. We at 48 Factoring do not believe in the traditional credit score; instead, we use our own proprietary internal risk assessment algorithm based on approximately 800 factors. In other words, your credit score is only one of these 800 data points—and not even a very significant one.