If you own a business and need to borrow for any reason, you may feel that your bad credit will prevent you from getting the funds you need. Fortunately, thanks to innovative lenders and unique products, it is not so.
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Imagine a scenario in which you have owned a business for five years and this business has grown significantly every year since it opened. You now want to open a second site in another city to generate more revenue. You go to the bank, talk to a loan officer and apply for a term loan to get the money you need to open this new point of sale. However, if your credit score is below 600 to 650, you will probably be refused. Big banks often look first and foremost at your credit score, and if it’s too low, the overall success of your business – and your sales – makes absolutely no difference.
Fortunately, if your bank refuses you a commercial loan, all is not lost. Many private lenders can work with you to provide you with the financing you need, regardless of your credit score. In fact, you have three options, even with bad credit.
Merchant Cash Advance – A merchant advance is based on the time spent by your business in the business and monthly credit card sales instead of your personal credit score. This gives you a lot more flexibility in the long run. There is only one-time commission and never interest, and you repay the loan with a percentage of your daily sales.
Private Term Loan – A private term loan or private commercial loan is an alternative to a commercial loan from a bank based almost entirely on your credit. With this type of loan, you get the same benefits, but you repay it with a fixed daily payment. This reduces the risks for the lender, which means that your credit does not weigh as heavily on the lender’s decision.
Equity Credit Line – Finally, a Credit Line Trade Equity This is yet another product that you can get with less than perfect credit, especially if you have a lot of equity in your business. This can be risky because you essentially put a large part of your business as collateral, but it’s also a great way to get a lump sum with no perfect credit.
With regard to a professional term loan, not only are the qualifications easy to meet, but you can also use this product to rebuild your credit over time. The better your credit in the future, the more sources of financing you have and the better your interest rates. These loans are surprisingly affordable, too.
All businesses must have access to credit in one form or another. So do not let bad credit stop you. If you need money to grow, buy equipment or simply stay afloat for a difficult time, consider a cash advance, a term loan or a line of credit.