You’ve recently found out that your business is considered “high-risk”. Suddenly, many doors that were open to you are closing. The task of running your small business just became even more challenging. But what does it really mean to be high-risk? And is there anything you can do about it?
In some cases, being categorized as high risk is not the result of anything you have done. In other cases, it is. Some industries are simply riskier than others, which causes many banks and traditional lenders to turn you away. If your business is new, it can also place you in this category because you simply do not have the time in business lenders and other institutions want to see.
On the other hand, if you have experienced bankruptcy in the past, you will be considered risky to work with. If you have poor or no credit, you will also be labeled as high risk. Other high risk issues include high chargeback rates, duplicate charges, lawsuits and fraudulent transactions.
How to Handle Being a High Risk Business
At one point or another, every business finds itself in need of extra cash. From hiring new employees and covering payroll to purchasing equipment and boosting inventory, there will be times when you need capital to increase cash flow. The problem with being high risk is that it seriously limits your access to business funding.
Over the past few years, alternative lenders have made it easier for high risk businesses. These high risk specialists have developed options like a high risk business loan to help business owners get the cash they need fast, while also rebuilding their credit. Many offer a setup process that is quick, simple and hassle-free. Merchants can secure the capital they need in as little as 24 hours.
Maintaining a Good Business Standing
In addition to working with an alternative lender, there are also a few other steps you can take to establish a good business standing. These tips will help you understand the ins and outs of what makes you part of a high-risk industry and how to manage it.
- Transparency is key – When working with a high risk processor, make sure you give them all the information about your previous processing company, or give them a history of payment processors you’ve worked with. This is the best way to build trust.
- Be true – Make sure you are always true to what your business has advertised; this will lead to fewer chargebacks and more sales, and it builds trust and establishes a good reputation.
- Focus on clarity – Always be upfront with your customers about the payment schedules for fees and refund or cancellation policies.
Don’t let being a high risk business hold you back from accepting credit and debit card payments or securing business funding. If your business needs high risk processing or a high risk business loan, get in touch with one of our experts here at First American Merchant. We will be glad to discuss our cost-effective services we provide as a high risk provider.