One way to improve your credit score is by making timely payments on all of your existing debts, such as credit cards and other personal or business loans. Paying off any past due or delinquent accounts can also help to raise your score.
You should also check for errors in your credit report and take steps to dispute them if necessary. Another way to increase your score is by keeping your balances low on current revolving accounts, such as lines of credit or store cards. You can also maintain a low debt-to-income ratio.
Increase your revenue
Your revenue plays an important role when applying for a business loan. Online lenders want to see that you have a steady income stream that can support small business loan payments and provide security against potential losses.
Increasing your revenue means demonstrating the ability to generate enough cash flow to pay back small business loans with interest.
There are a few ways to increase sales, like marketing campaigns, adding new products or services, or increasing prices. You could also try finding new customers or partners that would make your business more successful in the future.
Build a strong business plan
When you want to borrow money from a bank or other lender, it is important to have a good business plan.
This plan should have details about how you will use the money, how you will manage risks, what kind of return online lenders can expect, and projections for the future of the business. Any other relevant information should also be included.
Including industry research and market analysis data in your presentation to online lenders shows that you have done your homework. This will help you understand current trends and what it takes for success in this area.
Find a cosigner or guarantor
A cosigner is a person who agrees to pay back the small business loan if you can't. This means they are responsible for the money you borrowed.
A guarantor is someone who agrees to pay the lender back if you can't. They are fully responsible for the small business loan and don't need any money from you beyond what was agreed upon with the online lender.
Finding someone who meets these criteria may require searching through family members or friends who have suitable financial standing but it could potentially increase chances of approval significantly if successful so this option should not be overlooked if available.
Finally, having collateral is also a critical factor when applying for a small business loan. This could be in the form of physical business assets or liquid funds that can help provide added security against potential losses should you not be able to meet your repayment obligations.
Lenders want to ensure they are protected against any unforeseen circumstances so having.
Alternatives to traditional business loans
Here are some alternative financing options for businesses that are not eligible for traditional bank loans but still need capital:
Crowdfunding is a great alternative to traditional small business loans. It involves raising money from a large number of people through the internet.
Crowdfunding platforms such as Kickstarter and Indiegogo have become popular in recent years, allowing businesses to launch campaigns to attract backers who are willing to contribute money towards their projects.
The biggest benefit of crowdfunding is that it does not require repayment of capital. Instead, backers receive rewards for their contributions.
Also, crowdfunding does not require business credit checks and can be used for any type of business venture, making it an attractive funding option for businesses with limited access to traditional financing sources.
As with any form of fundraising though, it requires a lot of effort in terms of creating and marketing campaigns in order to reach the right audience.
Peer-to-peer lending is another option for businesses that are looking to borrow money without going through a bank or other financial institution.
With peer-to-peer lending, borrowers can post loan requests on online marketplaces like Lending Club or Prosper and then investors choose which ones they want to fund.
This method allows borrowers to receive funds quickly since there’s no need for lengthy paperwork or business credit checks as there would be with traditional lenders.
On the downside, interest rates on these small business administration loans tend to be higher than those from banks and other financial institutions due to the risk associated with peer-to-peer lending. Besides, some platforms charge service fees that may impact the overall cost of borrowing.
Merchant cash advances
Merchant cash advances (MCA) are also becoming increasingly popular among small businesses seeking alternative forms of financing.
An MCA is essentially an advance payment made against future sales; meaning that repayment amounts are based on a percentage of future business credit card payments received by the business over an agreed-upon period.
The key benefit here is that the amount repaid will fluctuate depending on how much money comes in each month. This means that if your business has a slow month you won't get hit with huge payments like you would with other small business loan options.
One drawback, however, is that merchant cash advances tend to have high-interest rates so you should carefully consider your options before taking one out.
For businesses that need only small amounts of capital, microloans can be a good alternative to traditional business loans.
Microloans typically range from $100-$25,000 and often come from nonprofit organizations or microfinance institutions rather than banks or other large financial institutions. This means they tend not to require collateral or personal guarantee when issuing small business loans.
Microlenders are often able to offer lower interest rates to entrepreneurs than what larger banks can provide. This is because microlenders' main focus is on helping smaller businesses succeed instead of making money from them. So, if you are an entrepreneur who does not qualify for more traditional forms of financing but still needs money to start a business, working with a microlender may be a good option for you.
Just like with any other type of small business loan, it is important for borrowers to take time to research potential lenders before agreeing to anything. This way, they will know what terms they are agreeing to before signing anything.
Always stay on top of your payments
One way to finance your small business is to make sure you pay your bills on time and achieve your SMART goals. This will help you no matter what type of loan products you decide upon.
If you want to have a good personal credit score, you should pay your bills on time and keep track of all the money you owe. It helps you get access to more traditional finance options in the future if you need them.
Some lenders offer lines of credit based on your accounts receivable, which makes it easier to get more working capital. To make this happen, make sure you send out invoices quickly and follow up on monthly payments promptly.
Ultimately, there are a variety of ways to finance your business and the option you choose should depend on your specific needs. There are different types of small business loans you can get when you need money.
Some loans come from a bank, some come from other people, and some come from businesses. Make sure you understand what the small business loan will be used for and what will happen if you cannot pay the loan back before you decide to get one.
Moreover, by staying on top of payments businesses can build up better personal credit scores, which may make access to more conventional forms of financing easier in the future.
With Mailchimp’s suite of tools designed specifically for small businesses, such as our Cash Flow Management service and Accounts Receivable feature – managing finances has never been simpler.
So if you're looking for an all-in-one solution when it comes to finding alternative methods for funding your business then look no further than Mailchimp.