For Entrepreneurs With Bad Credit, Business Financing Alternatives Provide Working Capital
Alternatives To Bank Loans For Business Owners With Bad Credit
The number of small business owners applying for loans continues to dwindle, with many reporting a lack of confidence in their likelihood to secure financing. Recent polls conducted by the Federal Reserve Bank of New York and the Small Business Administration indicate that a growing number of business owners are choosing not to apply for loans at all. Additionally, many of those who have applied for funding reported being denied due to issues such as having no collateral or low credit scores.
These trends indicate that business owners whose loan applications have been denied by banks are increasingly likely to give up on securing financing altogether. However, there are a variety of alternative financing options available for entrepreneurs with bad credit.
Merchant Cash Advance
Loans issued by banks require applicants to undergo an extensive review and approval process, put up collateral, and meet minimum credit requirements. For business proprietors who need capital right away, have little or no collateral, or have bad credit, this process may not be an option. In such cases, direct lenders offer merchant cash advanceÂ financing that enables applicants to get approved and receive immediate funding in as little as 1-2 business days.
While direct lenders will most likely take an applicant’s credit score into consideration, approval for a merchant cash advance is based not on credit history, but rather on the business’ monthly revenue. Some lenders require businesses to process credit cards and base their decision on monthly credit card sales. However, applicants can qualify for cash advance financing even if their businesses do not process credit cards, as many lenders can approve loan applications based on monthly gross bank deposits.
Even if a business owner has other outstanding loans, direct lenders like Horizon Business Funding can often provide additional funding. As long as a business owner is consistently making payments on previous loans, they will likely be eligible for a cash advance.