The last few years have been extremely tough for many small business owners. A tough economy means slow business, a loss in revenue, falling behind and even defaulting on payments. Any one of these can result in bad credit for a business owner. When a business owner then goes to apply for additional business capital, they will discover that they have been rejected.
The big problem for businesses that have bad credit is that they are now considered a risk in the eyes of traditional lenders. If your credit score is less than stellar, securing a loan will be extremely difficult if not impossible. If you do find a traditional lender willing to work with you, you will more than likely be offered terms that are so extreme it will simply push you further into debt.
Securing a business loan starts with doing a little research to find out what exactly your credit score is and therefore your credit risk. There is no credit score for businesses, so the credit score that is used is going to be your personal credit score. Your FICO score, on the other hand, is a summary of your credit risk. Your FICO score is what lenders use to assess whether or not to extend credit and for what interest rate.
Once you have determined your credit score situation, you can determine where you are. Is the situation worse than you previously believed? Have you attempted to secure funding but failed? Don’t despair. Bad credit can be fixed and built back up over time. In addition, there are alternative sources of funding available to you that are not as concerned about your present credit situation; this will also allow you time to build your credit score.
For example, a cash advance differs from a small business loan in that it is a sale. The provider is agreeing to purchase your future sales at a discounted cost. With 1st American Merchant Funding, the collections are revenue based; this means that if you have a slow month you pay back less, and if you have a busy month you will pay back more.
The great advantage of this type of alternative funding is that merchant cash advance providers are more willing to offer businesses struggling with a bad credit history the funds that they need. In fact, providers like 1st American Merchant Funding specialize in offering bad credit merchant accounts. Credit scores below 500 are approved, and no tax returns or financials are required.
Don’t let bad credit keep you from handling unexpected costs or missing opportunities. A cash advance is a great alternative for those with bad credit. Unlike a business loan, cash advances can supply a business owner with the funds that they need regardless of bad credit and in a timely manner. For example 1st American Merchant Funding can help you secure funds as soon as 72 hours from application submission.
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