Alternatives to Bad Credit Business Loans: A Solution for Equipment Constraints

bad credit business loans

The commercial trucking industry, automotive small businesses, landscaping enterprises and construction companies have some things in common; for starters a reliance on equipment to do their jobs and grow their business’s capacity to take on larger projects. However, these business owners also have a designation as “high risk” businesses given to them by the traditional banking establishment to contend with, which can significantly increase the difficulty associated with getting approved for small business loans.

This creates a serious constraint for business growth in industries centered on acquiring new equipment. When issues like bad credit are added to the mix, small business owners are more or less completely cut off from external capital provided by traditional banks. This in turn makes it much more difficult for them to acquire new equipment which is often outside of their reach when financing directly our of business cash flows. Equipment has the potential to greatly increase the revenues of a business once it is acquired, but since there is often a high cost barrier to surmount before it can be purchased, without capital businesses that rely on it can find themselves stuck if they don’t have multiple options.

Loan alternatives can represent a good option for this type of small business. While alternative capital products like merchant cash advances can carry higher costs than traditional bank loans, the fact that they are readily available to businesses that have credit issues in high risk industries makes them a potentially valuable resource when used correctly. Purchasing equipment is in fact one of the strongest uses for these types of products, as the high costs of machinery can necessitate an infusion of capital, while the potential profit added by additional machinery can assist in repayment of the advance toward the goal of establishing an alternative credit relationship.

Photo Credit to Elmetatron on Flickr

 

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