Trying to start a business with a bad credit history can feel next to impossible. Traditional lenders are unwilling to work with an entrepreneur with a less than stellar credit score. So, when the business finds itself in need of extra working capital for growth or expansion, the entrepreneur will struggle to secure a business loan. Unwilling to deal with the potential risks, banks will likely turn you away.
Some entrepreneurs have a bad credit score from a failed, past business venture. Other reasons may include payment history, outstanding debts, industry risk, public records (e.g. bankruptcies and liens), etc. Whatever the reason may be, there are other funding options the entrepreneur with a low score can turn to.
According to Entrepreneur Magazine, “Studies show that credit card and bank financing account for just 25 percent of the total funding needs of early-stage entrepreneurs.”
That means 75 percent of the other funding businesses require must come from another source – one that relies less on the entrepreneur’s credit rating. Many business owners turn to friends and family in this situation for financing help. Others seek grant opportunities. One of the most popular business funding options are alternative lenders.
An alternative lender like First American Merchant offer entrepreneurs struggling with a bad credit history a bad credit merchant account. A merchant account allows for funds to be transferred from card issuing banks to that business’ bank account. Merchants can easily accept debit and credit card payments. Without one, businesses are forced to resort to cash only.
If the alternative lender is a full-service provider like FAM, the business owner will be able to take advantage of a wide range of merchant services. Chargeback prevention services help businesses reduce the number of chargebacks it experiences. In addition, electronic check processing services facilitates faster funding on a wider variety of checks.
Because many of these alternative providers specialize in working with businesses considered to be “high risk” (including entrepreneurs with bad credit), merchants can easily secure business funding. Unlike working with a bank, the application for business funding with an alternative lender is fast, simple and hassle-free. There are minimal documentation requirements, and approval is received in as little as 24 hours.
Ultimately, a bad credit merchant account allows your business to build both your personal and business credit – without stalling or halting your plans. As your business continues its operations, you can also move forward on the road to recovery.