What if You Are a Business Woman with Bad Credit?

Getting a business microloan with bad credit was the "original purpose" so don't fret!

You don't have to go with a "government" microloan. There are many micro lenders throughout the US now and women are a prime source of clients for them. Women have been found to be more responsible with loans than men and micro lenders are very aware of this, so even with bad credit, you are still in a good position to be approved for a microloan if you meet their qualifications.

The micro lenders qualifications vary according to the organization or company. Here is a short example from BCEDA :

"BCEDA provides micro business loans for industrial or technology oriented businesses up to $20,000.  The service area for this program is Baldwin County.  The money borrowed under this program can be used for the purchase of machinery, equipment, furniture, fixtures, inventory and working capital.  The loan cannot be used to pay existing debts. 

The term of the loan will depend on the amount borrowed, the use of funds and the collateral offered.  As a loan applicant, you must demonstrate good character, acceptable credit, enough management expertise and commitment for a successful operation, and show that there is a reasonable assurance that the loan will be repaid."

LOAN QUALIFICATIONS

1. Business Ventures:  a.  Corporations; b.  Partnerships;
c.  Sole Proprietorships

2. Public Authorities and Public Bodies and Tribal Authorities.

Another example of questions asked by a micro lender at Opportunity Fund:

Business Planning
1. What products/services does your business offer?
2. What are your revenue expectations over time? How many units do you have to sell and at what price to reach those expectations?
3. What are the expenses of the business?
4. What does the cash flow model of the business look like – when do you have to pay for expenses and when will you be paid for your products/services?
5. Who are your customers, and how do you define your target market?
6. How are you planning to market to your customers?
7. Who is your competition, and how are you different?
8. If your business is in a commercial space, where is it located? What are the terms of your lease?
9. What systems do you have in place to manage your financials? Your employees?
10. Do you have all the required permits and licenses for your business?
11. If you are acquiring an existing business, what is the acquisition price based on? Do you have copies of the previous owner’s tax returns and/or financial statements?

Is a Loan the Right Answer?
1. What specific items would you purchase with a loan?
2. If you’re looking for “working capital,” what is happening in the business (new expansion, unexpected losses) that is causing the need?
3. What assets (inventory, equipment, cash) and liabilities (accounts payable, credit cards, loans) does your business currently carry?
4. How much money are you able to contribute to the business from savings and/or home equity?

Personal Finances
1. What are all sources of income into your household?
2. What are all the expenses of your household?
3. Is your household income sufficient to cover all household expenses?
4. If you own a home, what kind of mortgage do you have? Do you have any equity available to use as collateral? If you have a negatively amortizing loan, what are you plans to manage your monthly payment if/when your bill increases?

Credit
1. What is your credit score?
2. What is your impression of you credit score and what are your plans to improve your score over time?
3. Do you have any recent late payments or accounts currently in collection?
4. Have you ever declared bankruptcy? If so, explain what was happening in your life at the time.
5. How much credit card debt do you currently carry? Are you trying to consistently pay down your principal balance?

You can find several microloan lenders and their eligibilty requirements in the United States at our US Business Loan Lenders Page.