How to Finance Your Business with Bad Credit Business Loans

Getting approved for a business can prove to be a difficult task especially if you have an unimpressive credit.  For many lenders, a solid credit rating is an essential factor in determining the borrower’s capability to take on the repayment of the loan.  Obviously, a low Paydex score can send out the alarm that you are a “high risk” borrower, and thus your loan application may get declined.

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If you are a start-up business that have yet to build business credit, your personal credit score will be closely evaluated.  Again, lenders are looking for borrowers who can show consistency in managing debt and credit based upon your credit score.  If your FICO score is at 650 or below, the reality is that it would be more difficult to get approved for a business loan.

Does this mean you should give up your attempt to seek financial help through a loan?  The good news is that there are some lending companies that offer bad credit business loans for customers like you.  However, more work would be involved in finding the right lending company that offers a reasonable bad credit loan.

It is important to remember that predatory lenders do exist in the market, whose primary goal is to make money out of borrowers who are badly in need of loans because of their bad credit situation.  If you cannot qualify for a standard business loans, then you need to be doubly cautious in choosing your lender.

 

Business Cash Advance – Financing for Bad Credit

Is there an alternative to bad credit business loans? Instead of applying of a regular loan, a business owner may also consider acquiring a business cash advance or merchant cash advance.  This type of financing is a viable option for businesses that accept credit card payments.

How does merchant cash advance work?  You have the option to sell your credit card invoices or account receivables in exchange for a cash advance.  Typically, you can receive 80% of instant cash advance payment based upon the amount of credit card invoices or accounts receivables you have submitted.  Afterwards, the lending company collect payments of the account receivables.

This method of unsecured business financing is available even for businesses with no business credit or bad credit.  Because the market is filled with long time businesses with no business credit, business cash advance or merchant cash advance factoring is a popular financing option.

Some lenders may accept new or start-up businesses while others may require the business to be at least 2 years old.  There is also a minimum quota required on credit and debit card sales the business generates on a monthly basis.

But what it your business do not accept credit card payments?  In that case, you may also look for business cash advance lenders who will take in cash invoices or account receivables from non-credit card transactions.  When doing so, choose only receivables from your most trusted clients to ensure that factoring lending company will be paid on time.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

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