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A Small Business Administration (SBA) microloan can be just the thing for a new business in need of a small infusion of cash. Microloans can provide up to $50,000 but the average borrower takes out about $13,000. The loan funds can be used for working capital, inventory, supplies, and machinery or other business equipment. These small business loans are administered by local non-profit organizations, making it easier for business owners to have personal relationships with their loan servicers.

But what about entrepreneurs with less-than-perfect credit? Can they still qualify for microloans? While credit histories do play a large part in obtaining SBA loans, it is possible for those with blemished credit to get the funding they need. First, borrowers need to have a solid business plan. Lenders will loan money only to those they think will be successful. Poor credit business owners need to provide as much proof as possible as to their current profitability and projected earnings. Business plans should be very detailed and well-researched.

Business owners should also be prepared to provide explanations of any major credit mishaps in the past. Medical or family emergencies are certainly understandable sources of lower credit. Borrowers can provide statements of the reasons for their poor credit and attach them to their applications.

Having respected advisers can also be a helpful tactic for new business owners seeking cash. If lenders see that there is very competent business guru on board as an advisor, they may be more likely to believe the business can fare better in the future.

And one last tip to consider, the SBA provides a limited amount of funding for microloans each year. Those with bad credit stand the best chance of getting a loan if they present a well thought-out business plan at the beginning of the fiscal year, just after the funding has been disbursed to local agencies.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources