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“Bad Credit” and its Effects on Business Lending

Client at shop paying at cash registerThe financial crisis of 2008 left many problems in its wake, especially for small businesses. Small businesses found it difficult to find any lending since many of the credit markets froze. As a result, banks became reluctant to lend to any business that was not considered the best credit risk.

The recession also led to a significant fall in sales. This led to businesses having difficulty in receiving loans because they did not qualify. In addition, the collateral assets that so many of these small businesses owned lost their value during the recession – these are the assets that they used to help secure loans.

With all of these things stacked against them, small business lending declined. Lending declined significantly between 2008 and 2012, the effects are still felt by businesses today. While the economy has largely recovered, small business credit scores are still lower now than before the Great Recession.

According to freelance writer Ben Gran in an article for Kabbage, “What Does ‘Bad Credit; Really Mean in 2015”, “One reason for this decline in credit scores is that commercial and residential real estate, which make up 2/3 of the total assets of small business owners, suffered huge declines in value during the recession, making it more difficult for business owners to use these assets as collateral to qualify for a loan”.

Unfortunately, it is hard enough for a business with good credit to receive a loan from the bank, let alone one that has bad credit. If your individual credit is below 640, you are considered to have “bad credit”. A small business has a credit score system of 0 to 100; anything above 75 or higher is considered “good”. Are you struggling with bad credit? Are you in need of a business loan but have yet to be able to secure one?

Believe it or not, even if you have bad credit, there are still options out there for you. First American Merchant Funding, for example, is not hesitant to offer a business with bad credit a merchant cash advance. Even those with credit scores below 500 can be approved; approval is based on business performance rather than personal credit, financials or time in business.

First American Merchant Funding offers simple, flexible programs. Their merchant cash advance programs are revenue based collections. In addition, you can expect to receive your funds quickly – within 72 hours from application.

Don’t let bad credit slow or bring your business to a halt, apply for a merchant cash advance today!