Many small businesses have a difficult time attaining loans from traditional banks. Out of 63% of small companies that seek loans, only 27% are approved. This is largely due to a bad credit history or being classified as a “high risk” business. Not being able to attain working capital is a major issue for struggling businesses, as they need money to pay for equipment, personnel, and other expenses. Luckily there are alternative payment processors that specialize in providing loans to small businesses with bad credit and high risk merchants.
Unfortunately, being classified as high risk can affect a business’ ability to acquire merchant services from traditional sources and make money. Still there are a few ways that small businesses can obtain loans. Some turn to credit unions, member-owned and not-for-profit organizations that offer low loan rates. Credit unions give companies flexible payment options and rarely punish for repaying loans quickly.
Other small businesses may receive funds from the Small Business Association (SBA). An SBA loan guarantees a percentage of the loan to the lender. This makes it less risky for banks to accept small business applications.
Now there are a few online lenders that specialize in giving high risk merchants and merchants with bad credit instant approval.
If your business is related to the following industries it is considered high risk:
- Electronics
- Credit Repair
- Adult
- Telecommunications
- Bad Credit Assistance
- Technical Support
- Electronic cigarette/Vaping
- Travel
- Gaming
- Medicinal Marijuana
- Airlines
- eBooks
- Warranty
- Nutraceutical
When a high risk company or one with bad credit have a difficult time acquiring loans from credible lenders, they may turn to less reputable organizations for funding. These solutions can be dangerous for businesses and customers. For the best account management, high risk businesses and those with bad credit, must find credible third party lenders.
There are multiple ways to acquire a business cash advance with bad credit or with a high risk classification. FAM is an online merchant cash advance organization that help small businesses reach their financial goals through short term loans at generous rates. Contact us to learn more about merchant advance loans for small businesses.