It is often difficult for small business owners to obtain a business loan, even if they have an outstanding credit rating. That means that it is twice as difficult for those with bad credit to obtain a business loan. Luckily there are alternative funding options for small business owners that have bad credit. When any of these other options are used, different criteria are analyzed for funding consideration. The criteria that is typically examined includes the business’ bank deposit history, credit card sales, credit partners and other alternative data. This makes it easier for small business owners with bad credit to receive a loan or a bad credit merchant cash advance.
Small business owners that need loans can use revenue-based loans, a bad credit merchant cash advance, or a business credit card. Revenue-based loans can be obtained if the business has regular bank deposits. This program allows businesses to obtain loans that are up to 10 percent of the amount of their annual gross deposits. A bad credit merchant cash advance can be obtained based on the business’ credit card sales. The loan is an upfront cash advance that is based on the business’ future credit card sales. The issue with this type of funding is that providers often charge high rates, sometimes in excess of 38 percent of card sales. The providers also take a fixed percentage of credit card sales until the loan is paid back. This is not the case with all cash advance providers. Some are willing to accept a fixed monthly payment instead of a fixed percentage of sales. Using a business credit card instead of other funding options allows the small business owner to use a credit partner to help them obtain the funds they need. If the business owner can find someone that is willing to co-sign their loan or become their business partner, they can obtain a business credit card to obtain the funds they need as long as the co-signer has good credit.
Obtaining the necessary funds to run a small business can often be difficult, but it is important to remember that there are always other options to consider besides traditional business loans. Search for alternative funding methods such as revenue-based loans or merchant cash advances. Finding a business partner with a good credit score can also help you obtain the money you need to get your business started or to keep your business going.
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