Alternatives to a Subprime Business Loan
There are various loan alternatives that a subprime borrower can avail, including the following.
Subprime Equipment Leasing: Low-credit businesses can use this alternative to subprime equipment financing for obtaining crucial machinery and equipment for their operational needs. Where an equipment loan would have them buy out the equipment right at the start, the leasing option lets them forego that step and instead pay a lease amount periodically.
Midprime Financing: This is extended to borrowers who have FICO scores above the subprime—640-680—and who have shown profits in the preceding two years. If able to qualify for one, the business can expect rates around 15% and terms up to 5 years.
True bank-rate loans are always preferred, but failing to qualify for all the options under that can force a business to consider the above options in detail. Lack of a good credit score does not mean a lack of alternatives though, but it does mean there is a need for due diligence in picking out the right option.