Best Alternatives to Unsecured Business Loans for Bad Credit | Rupeezo

By Rupeezo | 28th, Mar, 2023

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For individuals with a poor credit score, getting an unsecured loans becomes nearly impossible. In order to approve your business loan application, a good credit score and a viable business plan are the primary requirements.

Lenders avoid giving away loans to individuals with low credit score as do not find the applicant reliable enough to pay off the loan.

However, the situation of applicants with poor credit score is not utterly hopeless, as there is option for unsecured business loans. Bad credit loans are secured loans and the best alternatives to unsecured business loans that can be availed despite the low credit score.

Why You Should Opt for a Bad Credit Loan?

There is a myriad of ways that a bad credit loan can help you in difficult financial situations. If you have a poor credit score, then availing of an unsecured business loan online is the option for you.

Here are some reasons to try an alternative to an unsecured business loan — a bad credit loan:

Debt Consolidation: If you are swamped in it and the interest charges keep on accumulating, then you can ease this burden. Availing of a bad credit loan will have you consolidate all your personal loans payment and credit card imbalances into one payment. Also, the interest charged on a bad credit loan is comparatively lower, and hence, you can easily manage your debt while saving money on the interest charges.

Unexpected Expenses: Financial emergencies come uninvited, and if you have a low credit score, then you may not be able to deal with those and find the best unsecured business loan options. But with a bad credit loan, you can meet unexpected expenses such as medical expenses. If you don’t have enough savings to cover unknown expenses, then a bad credit loan is there for the rescue. 

Building Credibility: It may sound contradictory, but a bad credit loan can help you build credibility. You just have to make timely payments for your bad credit loans, and by doing that, you can improve your credit score. No matter your bad repayment history, paying your bad credit loan on time, you get a chance to increase your CIBIL score and increase your chances to get further loans.

Revamping Business: If your business has failed or you want to restart it, then an unsecured business loans with bad credit is the help you need. With a bad credit loan, you can fund your business despite the low credit score. You can start or revamp your business and improve your financial condition by obtaining a bad credit loan.

Find if you are eligible to get an unsecured business loan.

Alternatives to Unsecured Business Loans

There are several alternatives to unsecured business loans in India. With a low credit score, you can apply for various bad credit loans, some options are mentioned below.

Peer-to-Peer Lending: Peer-to-peer lending (P2P) is done through a platform connecting lenders and borrowers. It allows borrowers to get a loan from individual investors. There are various P2P lending platforms such as LiquiLoans, Faicent, etc. The interest rates may be higher but still lower than other options like payday loans.

Invoice Financing: Invoice financing is a type of loan availing facility in which businesses can sell their outstanding invoices to a lender and receive immediate cash in return. This can be a viable option if you are looking for other options than an unsecured business loan online, and have a lot of outstanding invoices but no cash. This is a great way to improve the cash flow of your business and get credit without providing collateral. You can easily find invoice financing companies like KredX that offers funds to business depending on the value of their outstanding invoices.

Equipment Financing: Equipment financing is one such system of obtaining loans in which the business can borrow a loan for the purchase of equipment. In this, the equipment purchases serve as the collateral for the loan. This is a great alternative to unsecured business loans bad credit if you do not have any collateral to pledge. Also, it is a viable option in case you require machinery to start a new business. But if your business operations do not require such a purchase, then you may have to consider other options.

Microloans: Microloans in India can be availed even with a low credit score. But the microfinancing institutions offering such loans may have varied credit score requirements. Typically, these loans can be obtained even with a low credit score between 650 to 750. Microloans are generally offered to small businesses or start-ups wanting to expand their business. This unsecured small business loans option provides a lower interest rate and flexible repayment solution as compared to other loans.

Non-Banking Financial Companies: Although most NBFCs ask for a high credit score for offering various loans, you may get a loan with a low credit score as well. Several NBFCs offer personal loans to borrowers with a low credit score. They may increase the interest rate for giving a bad credit loan, but it could be a more flexible option. Some NBFCs can be lenient with their loan eligibility requirements as compared to banks. There are high chances of NBFCs sanctioning a loan with a credit score as low as 650. You need to contact different lenders and compare the rates before you apply for a bad credit loan with them.

Now that you are familiar with some of the best alternatives to unsecured loans, you must explore these options and choose the financing option that best suits your business needs.

To know more about bad credit loans, Apply for Business Loan here.

Frequently Asked Questions

1. What is Considered a Bad Credit Score?

A credit score below 650 is considered a bad credit score by many banks and financial institutions. It is difficult to get an unsecured business loan online with such a low credit score, but availing of a bad credit loan can help here.

2. What Are the Eligibility Requirements to Get a Bad Credit Loan?

The basic requirements to get a bad credit loan in India are:

• You Should Be 21 Years of Age
• You Should Be a Citizen of India
• You Should Be Salaried/self-employed
• You Should Have Repayment Capacity

3. How to Apply for a Bad Credit Loan?

For this, you can visit the official website of the lender from which you wish to avail of the bad credit loan. Provided the asked information and necessary documents, and choose the loan amount. The loan amount available to be chosen depends on the assessment of your repayment capacity by the lender and the lending capacity of the online loan provider.

4. Can I Get More Loans After Getting Unsecured Small Business Loans?

After availing of a bad credit loan, it is hard for you to get further loans or a top-up. You should repay the loan first before you apply for another loan.