Our answer to Quora: Are there any financing options for small businesses with bad credit? First and foremost, Don't Let Bad Credit Stop You From Growing Your Business
Owners of small and medium-sized businesses often face a common challenge; they need capital to grow and strengthen their businesses, but poor credit may be holding them back. Forget trying to get a loan or line of credit from a “traditional” financial institution, or bank. It's hard enough to obtain a bank loan with perfect credit these days, so a poor credit history will pretty much guarantee a rejection for bank financing.
But that’s why poor credit small business loans and bad credit business cash advances from LVRG Funding have become great options for small businesses in every sector throughout the U.S. We get it; running a business isn't easy, and maybe your credit took a hit as a result. But that doesn't mean that you shouldn't be able to take advantage of growth opportunities as they arise. Poor credit or not, we've got you covered!
Businesses need capital to grow, plain and simple. Our poor credit small business loans, business cash advances and revenue based financing options were developed with small businesses in mind, even those whose owners have poor credit.
A poor credit small business loan or business cash advance is extended to a small business owner with little or poor credit. If you have a bad credit history, it’s not impossible for you to get a small business loan to grow your business, just don't expect it from your bank.
First and foremost, when seeking a poor credit business loan or business cash advance, you have to be realistic and expect to pay a high interest rate. Reality is, if you have no collateral to put up, have poor credit and need fast small business cash, the cost of capital is higher to mitigate the risk. Need a business cash advance to boost sales by the end of the year? Well, the good news is...you have some options thanks to LVRG.
#1. Poor Credit Business Cash Advance - Poor credit business cash advances are offered to small business owners with poor credit, or those who have credit issues, bankruptcies, judgments, etc. There are only a few small business lenders that are willing to fund high risk merchants, and LVRG leads the way. Poor credit business cash advances are available to businesses that have been classified as high risk, and are therefore unable to obtain bank loans or any other form of financing from traditional lending institutions.
A poor credit business cash advance can provide small business owners with poor credit an upfront fixed amount of cash, up to $1,000,000 in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor or hold-back, from a portion of their credit card receivables or cash receipts. The remittances are drawn from the small business owner on a daily, or weekly basis, until the obligation has been met. This is a highly streamlined and simple solutions, to get cash in the door quickly.
#2. Small Business Revenue Based Loan - A small business revenue based loan could be your businesses lifeblood and provide it with several financial benefits. When your business is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days anyway. In this situation, a revenue based loan may be the best solution, especially if you are in a high risk industry, have minimal time in business, lack collateral or have credit challenges. If you use it wisely, a revenue based loan could do wonders for your small business. Without being capitalized, chances are you will wind up in a growth stalemate and a revenue based small business loan may be a perfect option for you.
If your business is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, strong cash flow, positive ratios and perfect credit. However, revenue based loans are offered based off revenue and cash flow, not credit or collateral. Many times, your bank statements are enough to demonstrate that you can repay your loan.
A revenue based loan could be highly advantageous for your business, and quite simple to obtain no matter what your credit score, collateral or time in business. It helps you grow your business quickly and it does not saddle you down with long-term, highly encumbering debt. It gives you the cash that you need quickly, to grow your business your way. What more could a growing business need?
#3. Poor Credit Small Business Cash Flow Loan - Even if your small business is growing, you may find yourself needing extra cash to cover day-to-day expenses such as payroll, rent and inventory, or to pay for short-term projects that could grow your revenue in the long run. Uneven cash flow is one of the biggest challenges of small businesses throughout all industries. For this type of business financing, lenders provide you funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is another great feature of a cash flow loan, as funding usually takes place in as little as 1 day in some cases.
One of the greatest benefits of a poor credit small business loans, revenue based small business loans, or a bad credit business cash advance, is that the funds can be used for a host of business expenses. There are typically no restrictions on how you choose to use your capital, however some of the more typical uses include:
- Buying Equipment – Could a new computer, desk, telephone, cash register, POS system or software come in handy? Money to pay for the purchase of necessary business equipment could help boost your profits.
- Paying Employees – Instead of running your business like a one-man show, a few extra hands could really help. Spending borrowed money on employee’s salaries can be the answer rather than disrupting your cash flow to cover this expense.
- Purchasing Inventory – One of the most common uses for high risk small business funding is buying inventory. It takes products in stock to make business profitable, so it only makes sense to invest in enough inventory to make sure you always have enough to sell to customers.
- Expanding the Business – If your business is experiencing some success, you might want to start thinking about taking things to the next level. A lump sum of immediate cash might be just what you need to get business booming.
So there you have it, 3 quick, efficient and “obtainable” ways to access capital for your small business, even with bad credit, minimal time in business or being in a high risk industry.
With that being said, the options are endless for small businesses to find money these days. The only problem is, most lenders are either too big, too automated, or completely inexperienced. LVRG Funding is a boutique small business funding company with an extensive track record of successfully funding America's small businesses. No sales teams, call centers, fake funding offers, or bait & switch contracts. Just straightforward, no nonsense, small business funding solutions. We didn't get here by accident, and we'll be around long after the fly by night funding companies disappear into the sunset. Have questions? We’re here to help! LVRGFunding.com
For further reading, I highly suggest the following articles on this topic: