Alternatives to Bad Credit Business Loans Increasingly Important
The financial climate of the US in the post recession period has been grim for small business owners. The collapse of Lehman Brothers triggered a severe clamp down in lending requirements on the part of major banks, and small business programs were some of the most hard hit targets, with collateral demands increasing at the same time that many small business owners experienced dips in revenue from depressed sales as well as devaluation of their homes and other assets that could be used to secure funding. In an informative article from the Washington Post published July of this year, it was noted that small business lending rates were down not only in larger banks, but also smaller local banks and credit unions, frustrating the hopes of expansion of many business owners who think of these banks as the only sources of financing available to them outside of family. Defaults on loans or mortgages caused by revenue losses dealt another blow to US small business owners, many of which found themselves trapped with bad credit and unable to pursue the plans that they had to build revenue in order to escape debt. Since this period, many business owners have discovered merchant cash advance as a form of alternative financing that is available to them despite bad credit scores or a lack of collateral. As an expedient alternative to bad credit business loans, these advances have been allowing businesses that have historically had problems obtaining credit to grow beyond the restrictions of their cash flows. The expansion of the alternative capital industry attests to the strong will to survive exhibited by small business owners. Examples of businesses that have been able to flourish in the face of the lending collapse are trucking companies, restaurants, construction businesses and even nightclubs. All of these models have large amounts of difficulty securing credit based on their business models. Poor personal credit on the part of owners can mean almost certain rejection by banks, even with adequate collateral.
Photo Credit to Photosteve101 on Flickr