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Don’t Let Bad Credit Stop Your Business

A recent report on small business shows that 63% of them target traditional banks for loans, however only 27% are approved. Many are disapproved because of bad credit, others are considered too high risk for most processors. This is a major problem for small business owners who desperately need capital to start and maintain their businesses. Now there is a growing number of alternative payment processors that specialize in providing merchant accounts and loans for small businesses that don’t have great credit. These processors take into consideration variables such as bank deposit history, credit partners, credit card sales, and other data sources.
Bank deposits – If a business has regular bank deposits, this can be used as a record to secure revenue-based loans. Usually, a business can get a loan worth 10% of its annual gross deposits even if it has bad credit. The loan term could be as long as 18 months, but have higher rates than traditional processor rates. Owners can repay the loan via ACH, and the loan doesn’t require tax returns or collateral.
Help From Friends – Sometimes a business can get a credit partner to gain access to larger lines of credit. To make the best of this arrangement, owners should seek out a business partner with a strong credit score.
Credit Card Sales – Merchant cash advances are common sources of cash for small businesses. Owners receive funds in exchange for a percentage of credit card sales. This is a popular option for businesses with bad credit, but can be extremely difficult to get out of. Some providers can charge more than 38% of the original loan. Plus many merchants take a fixed percentage of daily credit receipt volume for the life of the loan. This could be detrimental to businesses that already have a difficult time meeting their monthly expenses.
There are many other ways to acquire a business cash advance with bad credit. Alternative business funding and working capital lenders like First American Merchant specialize in providing merchant cash advances to most small businesses. These services give short term loans at generous rates for businesses with a credit rating as low as 500 with simple and flexible programs. Call to learn more about merchant advance loans for small businesses.