To establish a business or to ensure smooth operation of an existing one, it is crucial to have access to easy financing. Usually, the majority of entrepreneurs opt for business loans to fulfil such requirements. But approval of a business loan is not easy. One needs to qualify the eligibility parameters and provide essential documents to avail it.
Individuals who fail to comply with the eligibility requirements can alternatively opt for a personal loan to fulfil their needs. Nonetheless, one should remember that the minimum CIBIL score for a loan ranges around 750. Although, there are ways to avail financing even with lower scores.
Options to avail a loan with a bad business credit score
When a borrower holds a good CIBIL score, lenders will be assured regarding his/her capability to repay the loan amount.
Personal loans can be easily availed by self-employed individuals compared to a business or SME loan. This type of credit is unsecured and significantly helps business owners to finance multiple requirements. A personal loan does not require any collateral, and the documentation is minimal. Borrowers can avail an instant personal loan online to save time and access the easy availability of the fund.
However, a low or bad credit score will prevent borrowers from availing their desired credit amount or might require them to bear higher interest outgo.
In case you have a bad credit score, consider the following options before availing a personal loan:
- Secured business loan: Usually, personal loans are collateral-free and do not require any pledging of security. But this is only applicable if a borrower has a high credit score. On the other hand, if you have a low or no credit score, you need to pledge security and avail of an instant loan without CIBIL. Pledging an asset will allow you to avail a loan easily from your preferred lender.
- NBFCs focus on business loan: Such financial institutions offer an unsecured loan without any collateral. But it can be difficult for the borrowers who do not hold a minimum CIBIL score for a loan to avail them. Even though some NBFCs approve the loan amount by looking at borrowers’ income and employment status, it is only sanctioned against higher interest rates. In this regard, one should check the crucial factors that can affect the personal loan interest rate before applying.
- Web-based lenders: If your credit report does not hold a maximum CIBIL score of 750 or has a minimal score, it does not mean you are not eligible to avail a loan. There are various web-based lenders that extend credits to individuals with a low credit rating that require funds.
- Microloan: This type of credit is for emerging small businesses and start-ups. Micro-loan is provided by non-profit organisations known as microlenders. This type of financial option comes with a repayment tenor of up to 7 years and offers a favourable interest rate.
Therefore, borrowers can approach the options mentioned above to avail a personal loan with a poor credit score.
Moreover, some reputed financial institutions such as Bajaj Finserv extend pre-approved offers on their quick loans amount for the existing customers. Such exclusive offers can be availed on several financial products such as personal loan, business loan, credit cards etc. One can check their pre-approved offer by submitting their essential details.
Regardless, maintaining a minimum CIBIL score for a loan can expedite a borrowers’ loan application process. It also induces a sense of confidence among the financial lenders to approve the loan application without any complication.