Small Business Loan for People with Bad Credit

David GassBlog, Business Credit News, Small Business Financing, Starting a Business71 Comments

Business CreditSmall Business Loans in 2014

“If you have bad credit can you get a small business loan?”

If you’re asking this question perhaps you need to change it.  A better question for small business owners looking for loans when they have poor credit is:

“What should I do if I have poor credit and need a business loan?”

Now, we can answer the question with some clear steps and point you in the right direction.  The reality is that most cash lenders, banks and other lending institutions granting a loan or line of credit for cash rely on several factors to determine if a credit application is denied or approved.

In our research we discovered by speaking with direct lenders that more than 80% of business loan applications are denied.  The lenders tell us that the denials are not entirely due to poor personal credit of the business owner.  Based on what these lenders said I would venture to guess it’s about 50% of the declines.  The other 50% is due to factors other than just the personal credit score of the small business owner.

First we’ll look at what you do if your personal credit is poor and you need a business line of credit or a small business loan. In 2011 small business loans for those with bad credit can be nearly impossible to get – or so it seems.

Second, we’ll discuss the other factors that will stop many small business owners from being approved for a business loan or line of credit.  The positive about these other factors is you can make sure you do something about them before you apply for your next small business loan.

****Incorporate your business online and get a discount of $60 today****

Small Business Owners’ Business Loan Requirements Even with Bad Credit

So what is considered bad personal credit these days? You need to pull your personal credit score – also called a FICO or BEACON score to know what category you fall into.  You can do this at Equifax.

According to Equifax this is what they considered poor, fair, good, very good and Excellent.

If your FICO score is 280 – 559 it’s considered poor personal credit.

If you FICO score is 560 – 659 it’s considered fair personal credit.

Good personal credit is a FICO score from 660 – 724.

Very good personal credit is 725 – 759 and excellent personal credit is 760 -850.

Also according to Equifax of the entire U.S. population with a credit profile 12% have poor personal credit, 21% have fair, 18% have good, 12% have very good and 37% have excellent.

Applying for a small business loan with poor credit

When you apply for a small business loan the lenders are going to pull your personal credit score to determine your creditworthiness as one of the factors in granting an approval or decline.  However, if you don’t have at least a 660 FICO score you shouldn’t even bother filling out the application.

Small business owners applying for loans with poor credit or fair credit according to Equifax are getting denied before the application moves to the next stage.  In most cases the applications are entered into a computer and the system checks your personal credit score instantly and if it doesn’t have at least the 660 it’s being denied right away.

Of course it depends on the lender and the type of small business loan or line of credit you are applying for as to what minimum FICO score they need.  A 660 FICO is the minimum for a few lenders, including a couple that grant SBA backed loans.  They go that low, but keep within SBA guidelines because they know they’ll be reimbursed the majority of the loan if the small business owner defaults.

Minimum FICO for small business owners to get a small business loan

Based on our experience we see most banks and cash lenders moving to the next phase of the loan application gold cardprocess if the application has at least a 720 FICO score.

If your score isn’t at least a 660 or 720 and you want to improve it.  Here are a few steps we’d recommend.

3 Steps to Improve Small Business Owner’s Poor Credit

First, start getting your monthly expenses under control.  No matter how much you work on improving your score, if you continue to make late payments your score won’t get to a “very good” or “excellent” level.

Second, pull your personal credit report and purchase a monitoring service to keep on eye on your score and activity.  You need to know what is affecting the score and what you can do to keep improving it.  As a small business owner you have to watch your personal credit score more than the average consumer.  Small business owners use their personal credit more often than the average consumer and will pay a lot more in interest with higher rates and more in insurance if they don’t keep their scores high.

Third, starting building your business credit profile and scores with the business credit bureaus.  You want to limit or if at all possible eliminate any business activity on your personal credit report.  If you have bad credit and are looking for small business loans you may not have any other options for getting financing then to separate your personal and business credit.

Small Business Loans you can get with Poor Credit

The types of loans you can get while you wait for your poor personal credit to improve are limited.  However, there are a few options.

First, make sure you are taking the steps to build your business credit, which will help long term with your personal FICO score and the business.  Second, follow the steps above to improve your personal credit score.

Some of the options while you are working on these areas are:

Bad Credit Small Business Loan Option #1

Credit CardLook to the 4 F’s in small business lending: founders, friends, family and fools.  In many cases you can get a loan from family and friends when you approach them with what you are putting together for your business.  They want to see you succeed and will help out when they can.

Fools are those who know you but aren’t sophisticated investors.  They give you money with the hope to get repaid. They don’t require a lot of paperwork and in many cases don’t ask for a lot.  The fools can be great to work with or they can be a disaster depending on if you pay them back before they need the money.

Poor Credit Small Business Loan Option #2

Another option is to look for a small loan from one of the Peer-to-peer lending networks.  Peer-to-peer lending helps those with poor personal credit looking for a small business loan by matching you with investors who are looking for decent rates of return on their money.  Your personal credit report is pulled and based on your score you will pay a higher interest rate for the lower your FICO score is.  This is a pretty good option if your personal credit score is bad and you need a small business loan fast.

Bad Credit Small Business Loan Option #3

If you are pretty savvy with social media and understand how to drive some traffic to a web page you may want to look into crowd funding.  Crowd funding is relatively new and doesn’t require pulling your personal credit or even to pay back the money you receive.  It sounds to good to be true I know.  I had to check it out myself and do a lot of research when I first heard of this.  It is real BUT – you have to know how to drive some traffic to your crowd funding page in a short period of time to get the money.  I won’t spend a lot of time here explaining this option so for further research visit one of our other posts on the subject.

Bad Credit Small Business Loan Option #4

Look into alternative financing options that don’t rely on personal credit scores only.  Some examples include: Equipment Financing, Merchant Account Cash Advance, Checking Account Cash Advance, and Factoring.  These options may pull a personal credit report in some cases but don’t rely on the score as much as a standard bank line of credit or small business loan from a bank.

Poor Credit Small Business Loan Option #5

Build corporate credit.  I have seen several small business owners with a FICO score in the “Very Poor” category (FICO below 559) build corporate credit in the business’ name and received hundreds of thousands of dollars in trade credit with vendors that would have turned them down had they applied personally.

This is a great option for anyone with poor credit that wants to get a small business loan or line of credit.  The cash loan or line of credit would have been used to buy something, so why not just buy the “something” with trade credit established in the business name and without the use of personal credit or a personal guarantee.

Yes, it would be nice to have someone loan you $100,000 or $1,000,000 in cash without a personal credit check or guarantee even though you destroyed your personal credit, but that’s just not reality.  For now, you need to work on improving the personal credit and at the same time take steps that will improve your personal credit and build your business.  Having credit in the business name by building corporate credit let’s you keep business credit from showing on your personal credit report and it gives you access to credit to use in the business.

Leveraging other people’s money is what credit is all about.  Trade credit or Corporate Credit is a great example of this.  Those with poor personal credit need to take advantage of corporate credit because the business loan options are limited to non-existent for them.

Other Factors in Getting a Small Business LoanPlatnium Card

There are several other factors in getting approved for a small business loan or line of credit other than just pulling a personal credit report.  If you have poor credit or bad credit and need the business loan or line of credit you can take the steps to improve your score to an acceptable level based on what the lenders want and make sure you have these areas in place at the same time.

Lenders and business credit bureaus can do over 2,000 automated and manual checks on the borrower and their business to determine if they will grant a small business loan.  With this many checks you can see the importance of getting the “other factors” in place.

Here are a few things you should be doing:

#1 – Make sure the business is in compliance with the lending markets.

#2 – Have all documents, licenses, applications and filings match with the same information.  Don’t place one business address on your credit application while writing down another address on your business license.

#3 – Be a real business.  Don’t answer your business phone “Hello” or have it ringing to your cell phone.  Lenders want to do business with real businesses, act like one – better yet “BE ONE”.

#4 – Don’t play the Corporate Credit game.  If you have poor personal credit and you start getting credit you may be lured into applying for all the credit you get obtain regardless if you need it or not.  Build enough corporate credit to build your profile and scores with the business credit bureaus and get credit from vendors you can use in your business to help it grow.

Four Steps to Building Corporate Credit for Small Business Owners with Poor Credit

•  Separate your business from your bad personal credit by forming a corporation or LLC and applying for an EIN.

•  Use your EIN to establish a business credit profile completely separate from your bad personal credit.

•  Build a strong business credit profile while repairing your poor personal credit.

•  Prepare separate financial statements for your business that does not commingle any of your personal finances.


Leave your comments, questions or share your experiences in the comments section below.

David Gass

David Gass

Online Presence Expert at

David Gass is an Online Presence Advisor in addition to a Buying and Selling Websites Expert. David is a serial entrepreneur who operates several websites and works with investors and a select group of clients to build a profitable online presence. He also facilitates several mastermind groups and workshops for Online Business Owners.
David Gass

David Gass

David Gass

David Gass

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71 Comments on “Small Business Loan for People with Bad Credit”

  1. Susan Terra

    Will building corporate credit work for someone like me that filed bankruptcy two years ago and had a foreclosure recently. I am getting tired of using cash for everything in the business. I ran into hard times but still have the company – although much smaller it stills makes me a living. Getting credit in the business would be great. I know lenders won’t look at me with the bad credit I have.

  2. davidgass

    Susan – Thanks for the question. The short answer is yes. I’ve worked with thousands of small business owners and many of them were in a situation just like you. We were able to get them trade credit built in the business name with no use of their personal credit. Some of these people did have bankruptcies as well. Although some business credit bureaus will also check a business owners personal credit score and profile, it’s rare. The lender or company granting the credit would have to request the additional report and pay more for the information. This stops many of them from asking for it. If you keep the amount you are requesting lower than $25,000 you’re likely to get the credit in the business name if you work with the right vendors and are in compliance.

  3. Tina Roush-Pitcher

    Dear David

    If I knew three years ago what I know now I would never have started my own business !!!! I started with no loans no credit line no capital nothing….I didn’t think I would need them I have a home care agency thought that we would just go in do the work and be paid…..silly silly me !!!!!!Everyone needs a line of credit….My personal credit has gone from poor to poorest !!!! I have to much invested to through in the towel !!!! I am stuck !!! I don’t think anyone should start a small business at this point.

    1. davidgass

      Thanks for sharing. I know there are several people in the same situation as you right now. It’s tough when customers aren’t paying. It makes it very challenging. If I may give some advice for anyone in the situation where times are tough to make a profit and they have thought about throwing in the towel, here it is: #1 Don’t be afraid to stop the business and move on. There are times when ending the business is the right thing to do. That may sound odd coming from someone like me who has always been an optimist, but it is true. However, don’t throw in the towel too early. So how do you know when? It’s got to be something you decide at the beginning. When you first start a business you should have an exit plan. One that includes a contingency – if the business isn’t moving along as planned there should be a stop point. You need to decide what you are comfortable with. For me I had a dollar amount of debt I would be willing to go into and a set amount of time I was willing to last before bringing in $x amount of money for me personally. If I hadn’t reached those marks I was going to chalk up the business to a great experience. #2 For those sticking in – find other revenue streams and other options for generating revenue rather than just sticking to the same old plan. I had a friend who was a real estate broker in Vegas and needless to say – it wasn’t going well for him about two years ago, so he choose to get into rehabbing homes for the banks that held foreclosure property. The business is doing over a $1m annually.

      1. Michael W.Gordon Sr.

        Hi David, I have a LLC. business and a EIN # The Company Corporation set my LLC. for me. WG GORDON & ASSOCIATES LLC. I have been in business for 6 months now, and I have been reading about business credit form you. And I do not Apply for any of it yet. I am a Certified Real Estate investor, and i am try to build up Credit for the business. And, I do have about 29 years in homeimprovement/ rehabbing experience. And i need money or small line of credit. I need some up on this. I want to check out the private lending/ hard money lenders for this so I can started to Grow some Cash Flow. HELP PLEASE!!!

        1. davidgass

          If you are looking for cash to purchase a property you need to consider the hard money lenders as you mentioned. But even they in many cases want to see that you have some skin in the game. You’ll need some money of your own to buy put down on a property before they come in with the rest of the money. One strategy for those looking to rehab homes is to joint venture with someone else who has good credit and wants to invest in real estate but doesn’t have the time or knowledge on how to rehab the home. Now you can both work together to get the business off the ground. All that being said you can still build corporate credit which you can use for rehabbing the home. That is what most real estate investors use trade credit for.

  4. Robert Reifert


    In setting up my LLC with D&B, instead of Managment/Consulting they have classified it Real Estate Management. I’m told that the banks shy away from this type of organization to fund. Is this true? If so, How do I get it changed?


    1. davidgass

      This is one disadvantage of working with D&B to build your credit. They are a great company for buying credit reports from to know your vendors, but when it comes to helping small business owners understand how to get financing you should be working with a consulting firm like ours. Sorry for the shameless plug but I truly believe that. Our coaching staff walks clients just like yourself through several scenarios for building your credit. One thing that real estate investors/management companies need to realize is that the lenders don’t see them as low credit risks. In fact they have become high credit risks in the past few years. So yes, I recommend that you don’t set up a real estate management company, but rather a Marketing and Management company in an entity that only does that. Then when you start buying real estate – if that’s what you are doing – set up a LLC that holds those properties and have that entity hire the marketing company to find renters and manager the property. Of course, I’m not a lawyer or CPA, so don’t just take the advice and run with it, make sure you check with your local professional first.

  5. emmett b hall jr

    I was in the used car sales but, due to the economy i had to close my business. My

    interest at this point is to help the elders get to their doctors appointment by

    providing transportation . A start-up amount of 150,000 . If more information is

    1. davidgass

      Emmett – based on the little information you provided I can give a couple recommendations. First, why do you need the $150k for this type of business to start out? I’ve found that starting the business with a little money upfront and building sales that generate cash flow to run the business is the most effective. Why not look for ways to build the business without getting the $150k cash loan. Second, make sure you develop a business plan that outlines your financial projections for the next few years(up to3). This will tell you exactly how many customers you need to cash flow the business and how much you’ll be able to profit. It’s critical to have the plan put together.

  6. Daniel Oliver

    David, is was a builder primarily doing new construction and was hurt three years ago. My income has been next to zero and I’m not in physical shape to get a job that requires alot of physical work anymore.Funds are really tight and cash flow has become cash slow.
    By the grace of God I got a real estate license so I could also sell the properties we were building six years ago and have been doing BPO’s and selling rehabbed and foreclosed homes. I really love real estate and also got my brokers license a year ago and want to open my own brokerage firm. There is a great need in my community for someone with my years of experience in housing. How can I grow my business credit to get the capital needed for office FF&E (Furniture, Fixtures & Equipment) and some operating funds with the jacked up credit I have?

    1. davidgass

      Daniel – I’m happy to hear that you aren’t letting a downturn, take you down. It’s great to see you look for other opportunities in the same field to be your own boss. You can build business credit in your company’s name by setting up a new entity, getting into compliance with the lending markets, registering with the business credit bureaus and then working with trade credit vendors to grant credit without a personal credit check or guarantee.

  7. Jayne Tutela

    Thanks for your submission. I would love to say this that the very first thing you will need to complete is check if you really need fixing credit. To do that you simply must get your hands on a replica of your credit profile. That should not be difficult, since the government necessitates that you are allowed to get one cost-free copy of your credit report every year. You just have to inquire the right people. You can either browse the website for your Federal Trade Commission or maybe contact one of the main credit agencies instantly.

    1. davidgass

      Keep in mind that even though you can get the free credit report it doesn’t show you the FICO score. So you should still consider paying for it so you can get the scores. Knowing your score is vital.

  8. Niles Pritchard

    David, I’m an independent business owner with the Conklin Company. I started this business with only a $25 investment 2 years ago. Through a ton of hard work and sheer luck I’ve survived. I’m now making money at it as my “network” has grown. My question to you is this: Is it time for me to start looking at trade loan sources (I.e.- Office Depot, etc.)? My revenues are averaging $8000-$9000/month now and will go much higher starting in Nov. 2011 when a HUGE contract starts that will pay over 2 years almost $2M. I work from home and carry very little in way of inventory. Any suggestions?

    P.S.- my personal credit is sour (600+/-). I do have 2 debit cards(green dot and our corporate debit card – payroll)

    1. davidgass

      Niles – Thanks for the question. Yes, I would highly encourage you to start building corporate credit in the business name. You never know when you’ll need access to credit in the business. However, I can tell you that when your business grows it’s almost a forgone conclusion that you will need some kind of credit. Based on the numbers you are providing you could qualify for some good trade lines of credit which will help improve your companies position. I’m not sure about the kind of work you do, but in some instances there are companies that won’t sign a long term contract with a company unless they can check their business credit profile and make sure the company can handle the work. These companies believe that if their business credit report shows strong activity the company is more likely to succeed and they won’t have to worry about the business going under. You may want to consider that as well when you make your decision.

  9. John Oliver

    Building corporate credit is a great option for any business owner whether you have good personal credit or not. I know hundreds of business owners, and the reasons they have been so happy with building corporate credit are as follows:

    – Separate business from personal credit. When you own a company, you are just about guaranteed to need/want more credit in general. Several business owners wreck their personal credit because all of their credit activity is in their personal name. Every time personal credit is pulled, an inquiry goes on that personal credit report and lowers the score (let alone more debt). Building business credit helps avoid most of that activity in the personal name. I have a friend that used his personal credit for everything to run his business a few years ago. Problem is, his personal FICO dropped into the 500’s because of it. After he took advantage of building business credit his along with working on his personal credit, 3 years later his FICO is at a 700 and he has strong business credit to go along with it.

    – Become a lower risk to creditors by learning corporate credit compliance . Knowing the industry and what creditors are looking for helps make sure you are taking all the correct compliance measures to get credit. If you make just one mistake from a compliance standpoint, the business credit bureaus could mark you as high risk and make it very hard to ever obtain credit using your business. As a long time underwriter, I know that keeping these “red flags” off of your credit bureaus makes your approvals a lot more likely.

    – Get instant access to credit. Every business needs to make purchases so why would you use cash? As long as you pay back the credit, you are not only using other people’s money to build your business, but you are positively establishing your business credit to help with current/future lending needs. Plus, being able to get credit that requires very few to no personal guarantees at all is a HUGE plus. I know several people that use there business credit every day to access credit needs for their business. It doesn’t matter whether their personal credit is good or bad because their approvals in many of these instances are based solely off business credit.

  10. Krista Liss Stoume

    I recently started my own business and, though I don’t have bad personal credit, want to do everything in my power to make this business successful. I may not be able to control market conditions and lending requirements, but I can definitely work to build a strong business credit profile and history right from the get-go.

    I believe this will do four things: (1) Protect my personal credit (as I will be able to minimize or even eliminate using it); (2) Free up much-needed cash for my daily business operations (as I can use credit for purchasing items such as office supplies, gas, etc.); (3) Expand my credit options (trade credit, auto/equipment leasing, bank financing, etc.) if/when the time comes that my business needs more credit; and finally, (4) Give me better terms on any future loans/leases for which my business may apply (as my business will appear as a lower risk, therefore the bank can offer lower interest rates, etc.).

    Again, anything and everything I can do to make my business successful is worth it – and I know that having access to credit is extremely important in any business.
    —Krista Liss Stoume, Owner, Just a Shell, LLC (

    1. davidgass

      Yes thanks. If you have excellent credit and are looking for a business loan or line of credit I would highly encourage you to shop around. You can pick and choose the lenders you want to work with based on the terms they provide. That being said you should still make sure you have all the things a lender will want to see in place. Make sure you are in compliance with the lending markets, that you have a business credit profile and some trade references. If you have more than 6 months in business and some revenue even better. The number of lending options opens up dramatically when you have these things in place.

  11. Ralph Schroer

    I spent the majority of last year in the hospital due to heart problems. During this period my associates didn’t bother to pay anything, nor did they bother to take care of my patients, or submit my billing, consequently my business credit ratting went to hell. As their was only minimal finances coming into the home, my personal credit went to hell as well as credit card companies jacked my interest rates up to 30% or more. In view of this do you think you can help me?

    1. davidgass

      There are always options. Not knowing enough about your personal situation other than what you’ve stated it’s tough to know for sure. However, we have helped some people in some pretty bad situations. You may not be able to get a $150,000 cash loan or anything, but you will likely be able to build trade credit under a business entity. You will need to make sure you set up the business structure correctly at the start and follow each step in the system exactly as it’s outlined.

  12. Mjl excavating

    I have an excavating business and up til now have relied on personal credit which is nil due to history, and cash. I have recently started an LLC in order to build business credit as I am in need of a new work truck. The LLC has the same address as my personal name. Was this a mistake? Also, what is my next step in establishing business credit, in order to be able to purchase a work vehicle? Thank you for any input. mjl

    1. davidgass

      You’ve taken a few steps that are correct in starting to build the credit. One is setting up an entity like a LLC. You’re fine with having you and your business share the same address. There are plenty of home based businesses. However, you must still comply with the local licensing requirements and state requirements for the business. In order to get a truck in the business name I have found that the financing companies want to see a good business credit profile with D&B and / or Equifax. If you are leasing the vehicle you may find more options than if you are going to purchase it on a loan. You may find that if you put enough money down to purchase the vehicle they’ll give you the loan or lease regardless of what your personal credit looks like. I was able to do a deal with Ford a couple years ago with 25% down and 75% financed by Ford financing with no personal credit check or guarantee. It was strictly under the business name. I also got a deal done with GMAC.

  13. John

    I have a friend that filed bankrupcy due to the poor market. His bankrupcy has been done and it has been a couple of years. He had a FICO score 560 in the past but built it back up to 670ish. Will he be ok in getting a business loan from a bank if he filed bankrupcy in the past?

    1. davidgass

      Unfortunately, the likelihood of getting a business line of credit or straight business loan with no collateral when a BK was filed recently is going to be tough. It isn’t the ONLY consideration for the banks but it does play a big part in deciding an approval. I would say three – four years in the past would be much better. However, if he does apply he needs to have everything else look REALLY REALLY GOOD. Meaning he needs some length of time in business (> than 2 years), the business is cash flow positive and generating some good revenue, and the business has established some business credit reporting to the business credit bureaus. Someone with a BK in the last 4 years just has to realize that their requirements in all other categories are going to be much higher than someone with a 780 FICO. I would also suggest they don’t apply for any credit without first asking the lender if they would even consider the financing with someone with a BK in the last two years. Most of the banks will tell you upfront – “Don’t bother” and you’ll save the time and frustration.

  14. kingko

    im a beginning real estate investor with excellent credit, i recall you mentioning that it is not advisable to i.d your business as being an investing business for seeking lines of credit,
    can you detail a plan of how i should go about this the right way as a real estate investor

  15. Tim

    Dear Mr Gass,

    thank you for the gifts by e-mail. i found the reading to be very informative. In addition to being educational for all. I am looking forward to doing great things with the help and assistance of your firm.



  16. Angie

    Hello! I want to start a small business but my credit isn’t that good due to my house was foreclosed. I am only looking to borrow $8,000-10,000. Can you give me some ideas on where I can go to borrow this money? Thank you in advance for your assistance!

  17. Arthur B Smith

    David, I’ve never made more than 50,00 in any one year! That said I have always ridden the wave, gone out and got a job until things got better..I just got laid off that job and now I’m giving one major push in my business. I am working on my personal credit(554) with a professional. I have an EIN # but i’m a sole proprietor at this time. i am one of those who need a bad credit loan to survive.. thanks for the info

    1. davidgass

      I understand and I would recommend looking into setting up a corporation or LLC just to protect yourself if anything. The other nice thing with the entity is the ability to create the separate credit profile from you. With a score in the 500’s you’re going to have some trouble finding credit. When you incorporate and start establishing credit and the steps in the articles you’ll start moving in the right direction.

  18. Floyd

    I found the information very informative and something which can be used by anyone starting or expanding a business. As a veteran, I have attended my seminars on starting a business, even confereing with SCORE and non have presented a more in debt financing information for businesses than this article. Most often the primary focus is establishing good relationships with a banker. Thanks for the informative article.

  19. Kenneth Henderson

    Hello David,

    I formed a corp in 1989 that has been disolved. I would like to reinstate the corp and conduct business again and establish business credit. I need to get a short term loan for about six months (working capital or project funding). Is this difficult to do? My personal credit is on the decline since 2008, I was in a rebuilding mode until I was stricken with cancer, having not worked since 2008 the personal credit has gone from 650’s to 492/513/543….My cancer is in remission and I am told I probably would not be able to get back into my field because of companies not wanting to insure me due to the cancer…I need an angel or VC willing to work with me..40-50% ROI for the 6 months… This article was very informative..Your additional input would be greatly appreciated.


  20. brian

    David, hi i have have a score of 580. I was layed off for about a year and a half and i got behind i am trying to get back on track, i always had a score in the 780s till this. I whould like too buy into a franchise but the buy in fee is around 200,000.00 without a building. I have about 8,000.00 where should i be looking for a small business loan or what should i do. thank you.

      1. kingko

        im a beginning real estate investor with excellent credit, i recall you mentioning that it is not advisable to i.d your business as being an investing business for seeking lines of credit,
        can you detail a plan of how i should go about this the right way as a real estate investor

        1. davidgass

          It isn’t that you shouldn’t disclose what you do. It’s just that you won’t get a lot of credit as a real estate investment business from banks – traditionally. What I have seen some investors do is set-up the business as two businesses. One that is a management and marketing company. It’s clients are real estate investors and helps them to find properties, market them and work with them possibly on the rehab of those properties. They interview real estate agents to work with etc. etc. Then they also have a holding company, usually a LLC that holds property that the investor buys. Credit and loans are obtained with the marketing/mgmt company.

          1. KINGKO

            THANKS A GAZILLION DAVID !!!!!!!!!!


          2. davidgass

            No problem. A holding company is one that holds real estate for the real estate investor. It’s not an entity that you should conduct day to day operations in. For asset protection purposes alone you want to separate your assets from the daily business just in case. So most successful real estate investors I work with have an entity that is their management and marketing company that conducts daily operations and where they build their corporate credit and obtain financing. Then they have a separate LLC that they hold real estate in. Some investors will have multiple LLC’s based on the amount of equity each property has.

  21. Eboni Pollard

    I am starting an event planning company, my personal credit sucks. My scores are in the low 500’s. I am working with a law firm to remove a lot of inaccuracies from my credit, and trying to sign up for merchant credit accounts, just so that I can start building positive payment history. I know the importance of establishing business credit and have been looking at forming an LLC or filing articles of incorporation. What is the difference between the two? Which is better for my business? How do I know exactly how much money I need for the start-up of my business? I originally thought I would need about $50k, but now I am not so sure. Before you ask, I need enough capital to purchase office equipment like computers, printers, fax, office phones, and paper products. Also I need office space. What is the best way to go about doing this? Where do I go for these non bank funding options?

    1. davidgass

      You should go to for the differences of entities. I would highly suggest you consider building corporate credit which will allow you to obtain trade credit in the business name without the use of your personal credit. Many of the trade credit vendors that don’t require a personal credit check sell the items you need to get started. Also, you can get started by bootstrapping as well. You don’t always need to have everything upfront. Buy more as you start generating revenue in the business over time.

  22. cerelina

    Hi! anybody who can help me to upgrade my computers? I have an intenet cafe but my customers prefer upgraded computers…I need 25,000.00 (pesos) only. My family only depend on this small business for our survival…kindly help me….

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  24. karen

    Hi. I’m a single mom of two small children. My personal credit is poor at 530. I want to start a clothing store. I am in need of funding. I’m guessing establishing business or corporate credit is going to be the way to go. My question is, can this be done if the business only exists in name? I haven’t acquired the funding for a store front and for merchandise. What should my next steps be?

    1. David Gass

      Thanks for the question. I’ll post a reply shortly by adding a new blog post about the subject. This is a common question that I can answer, but not in a few words.

  25. david

    hi and thanks david for all the i must say great advice you were right i started with good credit and in applying for 4 credit personal cards witch i was approved and always paid on time when i applied for credit for my business that’s when it started lowering my personal to fair and now i find it hard to get business credit can u help i’m in the electrician/electronic/installation and construction business and would like to expand and except credit creditcards and sell equipment in need of a short term loan have 2 business creditcards never late on payments had business for 11 years never applied for business credit until now only had business checking account for 1 year don’t owe anybody can u help have 30years exp.can u help out .


  26. Mike Wright

    Hello David,

    Ran across your website while I was doing searches and found your information to be helpful.
    I was wondering if you could provide some direction on how I can find a reputable source for a business line of credit.
    I have a property that was in a life estate trust for sister who passed away several years ago, The trust when into my name when she passed, but I cannot find a lender who will take the trust as collateral. I am self employed and do not have acceptable verified income.
    I filed bankruptcy in 2007 but have been current in my bills since then. my credit score is now around 670.
    My business is home based and the home is in desparate need of repairs,
    I have tried state agencies to get loans but keep running into blocks that have wasted many hours of time without any results.
    I am very concerned about predatory lending because I have dealt with it in the past and have been burned.
    I now you are busy but any information you can provide would be greatly appreciated.
    Thank you.

    1. David Gass

      Based on your situation, traditional bank financing is probably not going to work. You’ll need to look at alternatives. #1 –, #2 – Find a partner for the business who has good credit and is willing to sign for the loan, you can’t own more than 5% when they apply though #3 – Reevaluate your money needs. Do you really need as much as you think to get started

  27. Elizabeth

    Hello David:

    I have bad credit, but I’ve been in business for more than 8 years. I have an insurance agency (corporation). My question is why when applying for a business credit card they ask for may SS# as well? Are they going to check my credit score? Or are they going to check the business credit with the FEIN?
    Thank you

    1. David Gass

      They will check your personal credit. A company is not scored by it’s own tax identification number when it comes to credit for the business. The business credit bureaus use other means. In 99% of the caes when you apply for a business credit card (Visa/Mastercard) they will ask for SS#. You can apply for business trade credit cards such as (Office Depot/Office Max/Staples, etc.) where you may not need to provide a SS# if the business is incorporated and has some history with the business credit bureaus.

  28. karen

    We are building contractors/developers that were hit hard during the crash. We are currently in a chapt. 13 in order to get the bank to modify a loan. We have relocated to an area with better prospects for business.

    We have purchased a lot and secured a private loan to build a house, which we have pre-sold. We have a private construction loan (they don’t report credit) where they cut checks as we need them for our vendors. HOW CAN WE BEGIN BUILDING OUR BUSINESS CREDIT, USING OUR FUNDS FROM THE CONSTRUCTION LOAN? We are an LLC. What can you do to help us establish other business credit?

    1. David Gass

      I’m no longer running the business I started back in 2000 that helped small business owners build credit. I sold the company in 2008. However, there are options for you. Credit is something you can build and should under the business and personal at the same time. Make sure you create an entity (LLC or CORPORATION) to separate the business from the owners and then start taking the steps to establish the business as a real business (licenses, phone, physical address, etc). Once you’ve done that start applying for trade credit lines that don’t require personal credit information. Those are the basic steps. It is a bit more complicated than that but it’s the most I can write in this response. 🙂

  29. lauren

    I am trying to start a medical billing and collections business on my own my credit score is poor from mistakes that i have made when i was younger and i have workd with people to get it repaired with no success, now i need a small business loan to really get things up ad going and i cannot get one anywhere i am being turned down left and right. At this poing i don’t know what to do and i am desperate i am currently working and i have purchased some things on my own with my own money but i can’t keep doing that it is getting to expensive what should i do.

    1. David Gass

      Building corporate credit is likely the best option. It really depends on what the credit will be used for and if you are looking to make payments or pay back loans in full at the end of the month. A lot of corporate credit can be paid back monthly, while there are loans with payment terms it may not be the best option. Most of the payment term loans require some collateral of good personal credit. I would recommend looking at

  30. Amy

    I’ve loved reading this and all the responses. In short, I have been conducting horse drawn carriage tours for almost nine years. The owners of the company suddenly decided they wanted to sell, and wanted to give me first dibs on it. Basically, they are selling the assets (horses, carriages, tack, etc.). They strongly suggested I establish an LLC. With my very poor personal credit (divorce, but no excuses), where would I start looking for the money to pay them? I don’t think prosper will deal with me. This is important, and I know full well (from managing the company so long) that the business will self-sustain, with profit to boot. Thank you so much, I do understand this is an older post.

    1. David Gass

      I’ll send you an email for specifics, but for everyone else reading – I’d suggest looking for partners. If you have family, friends or business associates it would be the best option if personal credit is poor and the amount is more than what they allow on

  31. Kevin J. Dabulis


    After being in the staffing business for over 20 years and being hit hard personally by the recession my personal financial situation suffered to the point of recent bankruptcy and foreclosure. They say bankruptcy helps you get a fresh start. Well, I have a great idea and some of my own cash (but not much) to get me started but I need help to get me over the hump to buy equipment. The business I’m starting is one that has many different applications within the automotive, marine and residential markets. I could explain more offline. I’ve researched it thoroughly and have found it to be very profitable with a large part of the market being underserviced SO IT HAS STRONG GROWTH POTENTIAL. I just need to buy the equipment and go to work. Family and friends are not in a position to help but would if they could. Any suggestions on where to go next?

    1. David Gass

      Depending on what the equipment will cost, you can look at and potentially look at a CrowdFunding website. To do the crowd funding you need to make sure you have a good marketing effort in place ahead of time or it won’t work. The next option is to network with people you know in the industry or business community to find some investors. Go to and look for business networking events (not that you will find investors there, but you can find people who know investors). I find that the more people you tell about what you are doing and looking for the higher likelihood of you getting what you want, as long as you are someone they trust and believe in.

  32. Pattie

    I want to open a beauty salon and my personal credit is very poor, can I get a business loan?

  33. Damian C

    Im starting a moving company for the second time and have bad credit,I was doing well but fell into some bad circumstances,I’m working on my personal credit but I still need to get a loan for 10k. Do I have any options?

    1. David Gass

      I would suggest looking at or if you have a retirement account, you can borrow against that to get started. Guidant Financial does work with retirement plans to set up it correctly. Other than that, you may want to look for an investor. Someone who knows you well enough to know they will get their money back. Once you start letting people know what you are doing and what you are looking for, you’ll start to get people to find the money for you. The last thing to think about is if there is some way to do the start-up with the $10k? Can you do a smaller amount down? Maybe start the business differently then what you’re thinking about.

  34. Michael

    Hi David,

    I have a custom cabinetry business with an S-Corp and partner who has good credit, however mine has sunk to 626 with some bad housing investments (foreclosure and shortsale). My wife and I have been paying down debt but my credit report kept the business from securing a 60k loan for equipment financing. The company hit hard times like everyone else in 2008 and had to tread water for a couple years. The last 2 years have been great for us and this year so far even better. Our business finally has cash flow and bank statements to back it up. Finally I have no doubts our business is going to continue at a good rate but we need to get the machine in order to produce faster without having to hire more employees that no one can afford to pay in California. Any ideas? One person recommended going to Dunn & Brad? I am not familiar with them though.

    1. David Gass

      If I understand, you need cash to repair equipment that will help you produce more product. D&B is not a solution to go to for financing. They are a credit bureau just like Experian or Equifax. What you need is a finance company that will work with you regardless of what your D&B or Experian report shows and just base their lending decision on other factors. What you should consider as an equipment sale lease back. This is a way to get cash now on equipment and you make payments each month to pay it off. Another option would be to do a merchant account cash advance if you are accepting credit cards or to use a factoring company if you have a significant A/R. There are several options for these types of companies online or you could go to a broker that will search for you but charge for the service.

  35. Ashley

    Hello David! I am wanting to open up my own online boutique and soon open a boutique with a physical location but as I am looking more into the online boutique I am seeing that I am going to have to buy a lot of inventory to keep everything either in stock or products on hand to ship out when ordered. Without having a lot of space to store everything I am now starting to think would it be best that I just open up a store, that way I will have the space to store everything and sell even more products but the only BIG problem is that I have very poor credit due to poor decisions with my finances when I was younger. I am slowly but surely paying off my debts but I’m wanting to get a SB loan to help out with that. What would you suggest in this situation? Should I still open up the online boutique to try it out or should I try my luck at getting a SB loan and open up a store location? Could I get a SB loan in my husbands name? even though he does not want a lot to do with the store unless it deals with designing shirts or something.

    1. David Gass

      I would suggest starting online and as you succeed and build a name for yourself, look at opening a physical location if that’s still something you want to do. I would start by writing out everything you would likely spend money on and then look online for lists of other starting expenses in case you missed anything. Then look to get the money for that. Small business loans with bad credit scores these days are tough to get from banks. You will likely have a better shot at working with investors such and finding angel investors.

  36. cleaning confusion

    I have an EIN and I have been working on trying to establish business credit for my commercial cleaning company for months now as well as trying to get my personal credit together but I have been unsuccessful to say the least. I have a 800 number as well as a D&B number. I got approved for a fleet gas card , the cards were sent to me then I could not activate them because they decided to decline me at the last minute. I applied with Sams club, office max and staples as required and still no approval. What should I do considering I have little capital to pay for consultants at this point. Please help.

    1. David Gass

      If you are being declined for the types of cards you mentioned, it’s likely the information on your D&B report is not matching what’s on the application or something is on the D&B report that causes the companies to issue a decline. Pull your D&B report and see what it says. Make sure all applications, licenses, etc all have matching information as well, when it comes to address, phone, etc.

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