If you have bad credit then the lenders are generally less willing to offer you any kind of loan or financial product. This is because it’s likely you have debts or have defaulted on payments in the past, and lenders always want to ensure they’ll be getting their money back when they give out a loan. However, there are ways to help work your way around this, including showing that your business is doing well – this is a great step in convincing lenders that you’ll pay back whatever you borrow.

Another option is to go for a secured loan. This is a great way of making sure a loan is available to you, as well as getting better interest rates. This is because you will use some of your assets as collateral, which the lender will be able to seize should you stop making all of your loan repayments. This will come with an element of risk if you take out a loan that you cannot repay.

Small business loans with bad credit are not impossible to come across. All it takes is a little time to make sure you put together good applications and a good case for the success of your business to show the lender that your business is worth the risk. It is a good idea to compare the many different lenders to make sure you are getting the best deal!

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Some years ago, if you were starting in business, the obvious place for you to go was your own bank. The banker would grill you with all sorts of questions and you would have to wait to find out whether they would give you the loan or not.

Now it’s very different. Even in a time of credit crunch, there are hundreds of lenders out there looking for your business. You can negotiate many key issues, such as due date, interest rates, fees, etc. But there is one thing they will all insist on and that is security in one form or another. After all, they don’t know you or your business ability, so they need to have some assurance of getting their money back.

So here are some suggestions as to how to secure a business loan.

* If you are looking for a loan to purchase the actual business premises, obviously the loan can be secured on the real estate itself. This is obviously the preferred type of collateral and may well ensure you get the best rates and loan-to-value.
* If the loan can’t be secured on the business premises, it might be possible to use the equity value in other real estate, such as your own home. Obviously you have to be very careful and ensure you have a well-thought-out business plan, or you could risk finding yourself homeless.
* If real estate is not an option, lenders will look at other possibilities for securing the loan, such as equipment, inventory or receivables. If equipment is used as security, the lender has to be satisfied that the useful life of the equipment will equal or exceed the term of the loan. The value of equipment as security depends on how old it is, but different lenders take different views. Some will allow up to 75 percent loan-to-value on new equipment, and a lower loan-to-value if the equipment is older. However, other lenders reverse this, on the basis that depreciation on new equipment, as with new cars, is much faster, whereas older equipment holds its value better.
* With inventory, the level of loan-to-value you will obtain depends on how the lender judges its “merchantability” – i.e. how quickly and for how much it could be sold. For ready-to-go retail inventory you could get 60-80 percent loan-to-value. For manufacturer’s inventory that consists of component parts and other unfinished materials, it could be as low as 30 percent.
* Receivables, or “accounts receivable,” refers to money which is owed to you by customers for goods or services you have already delivered. They are seen as a business asset so can be used as security. However, their value to the lender depends on how old they are. If they have been outstanding for more than 60 days, they will be regarded as having little value.
* Stocks and bonds can also be used as collateral. You can borrow up to 75 percent of their market value, but you can’t use the money to buy additional stock.

These are some ideas as to how to secure a business loan. In addition to collateral, some lenders may require you to secure your loan further by providing a co-signatory or guarantor for the loan. In this case you will need to set up a formal agreement with the guarantor as to how he/she will be repaid if your business fails.

Whatever you use as collateral, make sure that you obtain an assurance from the lender that once the loan is repaid, the full interest in the collateral will be released to you. And make sure you take advice from a competent and impartial financial advisor. If you can negotiate a loan successfully first time round, the next time will be a whole lot easier.

Are you looking for a business loan and worried about the credit crunch? Visit http://www.bizwrite.co.uk/realestate/lending.html to find out how you can access the biggest selection of lenders in the country and get instant multiple loan offers from qualified lenders.