When Is It a Good Idea to Apply for a Business Loan with a Co-Signer?
Getting a guarantor can help when you have poor personal credit, of the kind which could hurt your chances of getting approved for a business loan otherwise. It is a good idea to seek a guarantor’s help if you do not have personal assets to secure your business loan. However, the move will not necessarily help when your business cannot meet time-in-business or revenue requirements placed by the lender.
So, in what way can applying for a loan with a guarantor help? Firstly, it can help boost your odds of getting approved for the loan when your credit score falls below 650, or whatever the minimum score was stipulated by the lender. It can help you gain approval for higher small business loan funding amounts when you eke out the minimum credit score.
Bringing in a guarantor can help you avoid giving a personal guarantee or collateral to the lender. Your guarantor can help meet the lender’s personal guarantee or collateral requirement by backing your loan with his or her assets.