How to Get a Commercial Lease With Bad Credit
Obtaining a commercial lease when your credit is deemed to be bad is challenging, but not impossible. There are a number of creative approaches to consider. The key to success is to check out as many different options as possible. Many business owners end up with bad credit at some point during their career. During a recession, businesses often create new ways to find business, and will consider doing business with customers with low credit scores. Anytime there is a substantial niche market for attracting new business, creative entrepreneurs will find a way to adjust to that new market.
Seek out a motivated seller for the best chance of negotiating a commercial lease. Motivated sellers are easy to spot. They often advertise that they are willing to bargain. Many motivated sellers advertise that they will work with you if you have credit problems. Whether you are seeking an office lease, equipment lease or any other commercial lease, a motivated seller wants your business. With bad credit, you will have to find some way to assure the seller that they will not be harmed by your future actions. Offering a larger cash deposit is often a good way to provide reassurance that you are serious about doing business and will not compromise the agreement.
Find a co-signor willing to sign the lease papers. Consider a family member or possible business partner who trusts you. Before approaching a co-signor, know what you are willing to offer them in exchange for their help. If you have to, you can always offer a small percentage of the business in exchange for his signature on the lease. Be sure to do everything in writing so there is no misunderstanding about what is expected and owed, particularly if a small percentage of the business is offered to entice him to act as a co-signor. By putting the details in writing, a lot of future conflict and aggravation can be avoided.
Offer a large security deposit to show you are serious and have a lot at risk if you do not honor the agreement. Be willing to add collateral in addition to a large cash deposit. A willingness to pay a higher rate of interest will also sweeten the deal for the other company.
Offer to pay a portion of a commercial lease with a strategic partner. There are always prospective partners who would benefit by sharing the financial burden of a commercial lease. By approaching a partner already under contract for a lease, they may be more flexible and open on credit issues and unlikely to qualify you once you propose to pay a portion of the expenses. Identifying a strategic partner can take some research, but it is well worth the time investment if it allows you to get the commercial lease you need for your business.
Barter for a commercial lease. If there is an obvious connection between your business and the industry you want to lease from, then offer to barter your services for the commercial lease. If there is no automatic barter opportunity for exchange, then joining a barter club allows a business to barter with one member of the club, then use the credit earned with that member toward a deal with another member, like the lease required. Before joining, be sure that the lease you want is a possibility and is offered through members of the barter group. Bartering is a time-tested solution for struggling businesses to get what they need.