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What Do Lenders Look for If You Have Bad Credit?

Getting approved for a business loan isn’t always easy. While different lenders have different requirements, many of them will evaluate your business’s credit score as well as your personal credit score. It’s a risk analysis process. By evaluating your credit scores, lenders can gauge your risk of default. Bad credit indicates a high risk of default, which may cause lenders to reject your loan application. You can still obtain a business loan with bad credit, but you’ll need to know what lenders look for.

What Do Lenders Look for If You Have Bad Credit?

Business Plan

Assuming you are applying for a business loan and not a personal loan, lenders may look for a business plan. A business plan is a formal document — it typically consists of multiple pages — that outlines your business’s operations and its strategy for success.

With bad credit, lenders will need reassurance that you’ll be able to pay back the loan. A business plan can provide them with this reassurance. Lenders can review your business plan, after which they’ll see that your business has a clear path to success.

Personal Guarantee

Some lenders may look for a personal guarantee if you have bad credit. A personal guarantee is a legally binding promise to pay back a business loan. If you have bad business credit, for instance, the lender may require you to make a personal guarantee. You’ll have to sign a contract agreeing that you, personally, will pay back the loan if your business is unable to.


Of course, collateral is something else that lenders may look for if you have bad credit. Collateral is an asset or a set of assets that guarantees a loan. With bad credit, you may have to provide the lender with collateral. You’ll retain ownership of the collateral as long you pay back the loan according to the lender’s terms. If you default on the loan, though, you’ll forfeit ownership of the collateral to the lender.

Loans that require collateral are known as secured loans. Loans that don’t require collateral, on the other hand, are known as unsecured loans. With bad credit, you’ll have an easier time getting approved for a secured loan than an unsecured loan.

In Conclusion

You can still obtain a business loan with bad credit; you just need to know what lenders look for, including a business plan, personal guarantee and collateral.

This article was brought to you by Intrepid Private Capital Group – A Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.

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Intrepid Private Capital Group • July 29, 2021

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