When Banks says “NO”,
Merchant Advisors says “YES”.
Business owners with a bad credit score are not neglected by the lenders anymore. Credit goes to the emerging Small Business industry; the lenders are offering loans to multiple small business owners. So, now if you are facing any financial trouble, don’t waste your time knocking at the doors of traditional lenders – Banks & Credit Unions.
The reason for rejection is legitimate; would you be comfortable lending your money to someone who has shown himself a delinquent in the past? The sensible answer would be “NO." Bank and Traditional lenders look for business owners with a clean record; they don’t want to jeopardize their resources.
A Brief Overview
- Best bad credit small business loans of 2019
- Why is there so much fuss about Credit and Credit Score?
- How to get a Business Loan with Bad Credit?
- Amplify your chances of Loan Approval
- Is Credit Score the only prerequisite or do lenders look for more?
- How can you use Bad Credit Business Loan to improve your Small Business?
- What makes us different from other lenders?
- Final Thoughts
Bad Credit Business Loans
Looking at the lending pattern, retrospectively, if your credit score is below 629, then you are an owner of a bad credit score. The turmoil that follows is no secret! The said statement sheds a ray on the importance of Credit Score, but it does not mean at all that you have closed all the doors of possibilities on yourself. The whole scenario is a bit baffling; you need business financing to get yourself out of the bad credit spiral, and if you have poor credit you won’t be qualified for a traditional loan. Don’t let this dilemma bring you down.
Alternative lenders are available at every corner on the street to act as a Band-Aid on your financial scratch. Merchants Advisors acknowledges the frustration caused by the rejection and that is why they offer an amalgam of Business Loans suitable for every nature of small business.
Best Bad Credit Small Business Loans of 2019
Hunting a small business loan for your crumbling business in this fragile economy? You are in the right place; we offer custom-fashioned business loans for every type of small business. Our loans will help you find a way out of the financial crisis.
Here are six of our best financing options for bad credit business owners:
1 Short-Term Loans
These loans can provide you with a handsome lump of money once you have agreed to pay it back on time. Be mindful that these are the easiest loan to apply and they have higher interest rates and APR values.
You can have access to the Short-term Loans in two days at maximum, and fast cash comes at a price. Usually, these loans last for 3-18 months and their easy application can act as a fix that you need instantly.
If your credit score is above 500, then this is the best option for you and its early loan payments are a plus. Most of the alternative lenders, such as Quarter spot are even willing to let go of the remaining interest only if you have made all of the payments before the due date.
2 Business Line of Credit
A business line of credit is the quick financial solution for all of your financial troubles, although they come on higher rates than the rest of the options. It provides continuous access to funds if this is what business needs. Just like a traditional credit card, the interest will only be charged on the open balance. One of its endless perks is it asks for monthly payments instead for weekly or daily payment. So if you think this is the best solution for your business, then apply for one right away and rescue your disintegrating business.
3 Invoice Financing
Invoice Financing is the best option to secure a business loan. It opens up a window of collateral offerings. Once you have offered your unpaid customers invoices as collateral to the lenders, you have improved your chances of approval.
Usually, the lenders offer you 85% of the total of the invoice receipts, and the rest goes out as a fee. This is a remarkable way to get the necessary funds to grow your small business.
4 Equipment Financing
If your small business needs an upgrade of technical equipment to carry out monotonous operations, then this is the safest and reliable option for you. If you have ever leased a vehicle from the bank, then this will be easier for you to comprehend. Here, you have given the total money that you need to make the purchase, and later you pay off the loan payment terms.
If your business credit score is below 600, we have good news; you can still qualify for the loan. And if Equipment Financing is what your business needs then nothing should stop you from applying.
5 Merchant Cash Advances
We can’t emphasize on Merchant Cash Advance (MCA) being the best small business financing solution for bad credit scorers. Merchant Cash Advance works like a credit card, and it’s the best fit for business owners for when the sales are high the lenders will take considerable money out of your sales and when the sales are low, the lenders will take the money accordingly.
As compared to the other bad credit business options, MCA is the most expensive one. So take a chance on it only but only when it is required and necessary.
6 Working Capital Loan
Looking for funds to cover your routine expenses like payroll, inventory, taxes, and others? Merchant Advisors provide Working Capital Loans to meet your every financial requirement. You can get loans ranging from $5,000 to $500,000, with comprehensive paperwork and easy approval. If this is the best suitable loan for your business, apply right away!
Now that you have touched the surface let us dive in for more detail. Here is a complete guide which will brush up on the importance of your current financial standing, the domains that most of the lenders look in to, and most importantly what are the do’s and don’ts of small business loan lending criteria.
Exceptional (800 - 850)
If your credit score sits in between this range, in the time of any financial crisis, banks and traditional lenders will happily assist you.
Very good (740 - 799)
Even though it is not the best of the best score, but your chances of approval still exist.
Good (670 - 739)
A credit score above than 670 gives you a handsome chance of loan approval from the Small Business Administrative loan.
Fair (580 - 669)
Here you will qualify for a couple of small business loans; they are willing to look past the low credit score.
Poor (300 - 579)
Let’s face some hard facts; if your credit score is lying below 500, you will be facing a hard time getting approved for a loan. But if your business has been running for a long time period and it’s profitable, then you are out of the woods.
But how to get a Bad Credit Business Loan?
Merchant Advisors provide access to the much-needed working capital to carry out day-to-day operations. Secure yourself a bad credit business loan by following these three steps:
1. Acknowledge your Personal Credit Score
As mentioned above, the personal credit score and business credit score are two major factors that the lender relies upon when offering loans. Calculate the credit scores before applying for a loan.
2. Understand the eligibility requirements to qualify for the loan
Every financing option demands a specific set of requirements, and if you want to secure the loan, you will have to meet the terms. Usually, those terms revolve around your Personal Credit Score, how long have you been running this business? And lastly, your annual revenue.
One can’t be a true judge of it, so it’s recommended to ask for a professional’s help. Merchant Advisors provide expert’s help to all of its applicants. If you want their opinion, apply for a loan.
3. Pick the best option for your business
Your previous research might be giving you a rough idea about the availability of a wide range of bad credit business loan. You shouldn’t apply for the first one that you see, exhaust all of your options and then make a final decision. Apart from considering eligibility requirement and repayment factors make sure your lender doesn’t have a notorious reputation. Customer’s reviews might be of help here. We, Merchant Advisors, have a 90% customer satisfaction rate.
Don’t assume that credit score is the only factor responsible for your growth there are multiple other domains that can help you get what you are looking for.
Amplify your chances of Loan Approval
It is common knowledge – loan approval is an uphill battle. You can’t go unprepared especially if you have a weak defense meaning poor credit score. In order to pose a strong position, it is recommended to provide collateral and have a co-signer.
No alternative lender is naïve enough to risk his/her reputation and credibility by offering the loan to a defaulter. Applying for a business loan with bad credit is already asking for more, so it is better if you are willing to offer collateral and there are two ways you can do that:
Do you want to upgrade equipment for your restaurant or construction business, but don’t have an impeccable credit score? Apply for the equipment financing, here the equipment you financed will act as collateral. Failure to make repayments on time will result in the lender seizing the financed equipment.
In the invoice financing, the unpaid invoices from customers act as collateral. The lender will take some funds out of the invoices till the repayment.
All in all, you will be getting the loan to get yourself out of any financial trouble.
Help from a Co-Signer
Basically, a Co-Signer is someone who agrees to take care of your loan payments if due to any rational reason you are unable to do so in time. So, if you have any relative that has a steady business growth and a decent credit score ask them to help you out in the hour of need.
Is ‘Credit Score’ the only prerequisite or do lenders look for more?
Although having a good credit score is important to qualify for the business loan, but this isn't the only factor that counts. Sometimes the lender ignores the bad credit score if a borrower has streamlined cash flow and a strategic business plan. Merchant Advisors values hard work and credibility; we have listed some domains considered by the lenders.
Annual Revenue holds a remarkable significance in a loan application, the more the revenue, and the better are the chances of approval. It holds more importance when a business owner is applying with a bad credit score. If your annual revenue is high, the lender has a trust on you that you will be repaying the loan within the given time.
Some alternative lenders want to know whether the business is profitable or not. If you have legitimate documents to show three-month business growth to the lender that would be great, but if your business is not administrating noticeable growth, the loan terms will vary accordingly. The lender will consider your loan application after considering all the contributing factors.
Credit Debt Obligation
Borrowers should discuss the ongoing repayments with the potential lenders, to avoid any future inconvenience. Most alternative lenders don’t like to be in that position. It merely depends on the financial position, nature, and the framework of the particular loan that the borrower has applied for! There are other alternative lenders that don’t mind ongoing debts; they are willing to approve a business loan so an owner can pay off the previous debt, easily.
Put yourself in the shoes of the lenders, will you lend a loan to a firm that has non-existent cash flow? The rational and sensible answer would be ‘NO.'
If you have a history of managing cash flow responsibly, then your chances of loan approval are enhanced because the lenders would know that you will be paying the debt on time.
Background and history matter a lot; if you have faced any bankruptcy or foreclosure in the past your chances of loan approval are slim. In this case, make sure you are fulfilling the rest of the mentioned criteria.
Running a business is not a child’s play. If you are managing it aimlessly, then, you are not going to go that far. When applying for the loan, other lenders will ask for a solid and realistically approachable plan, for they need to know what is going to happen with the money.
A borrower's chances of loan approval are instantly raised if the business has a five-year business plan. We would really appreciate if you give us a plan so that we know your business is not a dead end.
How can you use a Bad Credit Business Loan to
improve your Small Business?
If you want to eradicate the ‘Bad Credit’ spell from your business, then you need to be more vigilant about how you play with the resources that are the courtesy of fast business loans bad credit. Here are a couple of steps that you should consider as a precautionary measure to avoid all financial strain in the future.
Pay the debt on time.
Set multiple reminders or hire assistants that can act as reminders, do whatever you need to do to make sure you are making repayments on time.
By paying the lender on time, you will be maintaining a professional relationship with the lenders and more importantly; this will give you a solid chance to improve your credit score.
Clean up your financial box.
We can’t emphasize the importance of good financial standing and decent bank account enough. Every lender, be it traditional or alternative will look at it.
So, save yourself from the future hassle and get rid of all the skeletons from your financial closet. Clear out any foreclosures, overdrafts, and bankruptcies.
Keep a check on your Credit Score.
Don’t demand a credit score sheet just when you need a business loan. In the regular days keep your credit score under the microscope so that you don’t have to face any surprises.
With the advancements in the digital world and small business industry, there are many online applications or software that can help you keep a check on your credit score. Moreover, if a borrower repays the loans on time, the credit score improves!
Running from your financial standing is inevitable, so isn’t it better to keep an eye on it?
Don’t call quits!
Don’t give up on your dreams just yet. The longer you are in the business, the better are your chances for loan approval.
The time that you have given to your business is always going to be a huge factor in the loan approval application.