The phrase by Benjamin Franklin, “If you fail to plan, you are planning to fail” sounds like a cliché but still, it stands true to its core. A calculated and strategic business plan which highlights the purpose, mission and vision of your startup finely can divert the lender’s attention from a bad credit score. In a world where the credit score is the king, you must know that the bad credit score does not make you an incapable business manager. A good business or a startup firmly stands on the foundation of many pillars; a credit score is just one of it. Since it is a startup, business owners might need an extra flow of cash – a business loan – with a bad credit score. Multitudinous lenders are offering bad credit business loans along with an awful lot of other funding options for startups and well-established businesses.
Some private lenders have concluded that your chances of loan approval are greater when you have a credit score of 700, and you will access to a business loan with an economical interest rate. However, if you have a bad credit score make sure, you have a top-notch business plan and out-of-world convincing abilities. Both of these elements can help you secure a bad credit business loan.
A tip to secure the best deal: work on your credit score and if you can wait, apply away when you have a consistent cash flow. But if you need instant access to small business loans, the following are three bad credit business loans and alternative funding options for your startup. Assess the selection criteria of each external funding and apply for the one that gratifies the financial needs of your startup.
Starting with bad credit business loans, first on the list is:
- Business Lines of Credit
Do you need an extra set of hands to bring in more profit into your startup? A business line of credit can provide enough funds to support training and hiring. Even when you are too scared to apply for a bank loan because of bad credit but need funds to take advantage of the once-in-a-lifetime opportunity, you can apply for a business line of credit and you will get fast access to the funds.
When speaking in the technical terms, a business line of credit is not a loan. The borrower can have at least up to $5,000 to $1 million. If you need twenty-five thousand dollars to stock up on inventory, you will withdraw the required amount and pay interest only on the withdrawn amount. If you need better interest rates, then apply for a secured business line of credit. Pump your application by offering collateral to the lender; this is a must, especially if you are sitting in the bad credit.
In the world of a business line of credit, there is no discrimination! Businesses with a credit score of 500 and above are more than welcome to apply. But your business must be a year old, good luck applying!
- Small Business Loans (Working Capital Loan)
Just as water is important for life, working capital is important for the survival of any business – even businesses with a bad credit score. Usually, this funding is unsecured, so if you don’t risk your assets, this an ideal funding solution of your business. When a financial emergency knocks at your door, you take care of it with a working capital loan.
A bad credit working capital loan comes at an affordable cost, easy repayment terms, and laid-back eligibility criteria. More importantly, if you are excelling in other departments a bad credit score won’t act as an obstacle in the loan approval process.
- Merchant Cash Advance
Just as a business line of credit is not a loan, a merchant cash advance is not a loan; it is a cash advance offered to the borrower. The only way, this is different from the rest of business owners, is that instead of making the daily, monthly, or yearly payment. The lender takes an agreed-upon percentage of credit card sales to form the lender. A merchant cash advance opens its arm to businesses with the bad credit, happily.
A cash advance is the most convenient funding option but please note that it is the most expensive one as well. This is an ideal funding option for retail and restaurant options. But the longer it takes to clear out all the debt, the higher will be the interest rate!
Take a clear note of all the factor and then make a final decision. We have covered the business loans you can have with bad credit, now let us move on to the alternative funding options.
Pay a visit to the official pages of the Kickstarter and fundRazr, they are the most popular crowdfunding platforms. It works simply; investors pay more attention to your business plan and startup campaigns instead of the credit score. So, if you are a people person and can build a rapport with customers easily, you stand a chance.
Either other parties will invest in your business or they donate the money to your cause. Work on your startup campaign, roll the dice and cross your fingers.
- Small Business Grants
If the financial need of your startup is short-term and you don’t need a large sum of money, then applying for a small business grant is another option. On state and federal level, multiple small business grants are available. As the winner is not obligated to return the money, the eligibility criterion is hard but there is no harm in applying.
- Family and Peers
Knocking at the doors of friends and family is also an option. Show your startup plan and convince your family and friends to fund your new endeavor. Think of it as a challenge, if you can sell your business idea to your peers, you are a step closer in convincing the market.
The plus point of this funding option is that your deer ones will value your determination and business plan more than your financial position. Although it is a decent funding option but doesn’t put your relationships with friends and family at stake for business. If you can get a fair business deal from home, make sure all the major postulates are well-written in a signed document.
Scan each funding option carefully and choose the most reasonable and affordable bad credit business loans for your startup. Head over to the official website of Merchant Advisors, and apply away! To stay up to date, follow us on Twitter and Facebook (@Onlinecheck). If you have any question, feel free to call us on our toll-free number at (833) 827-4412, our loyal and keen financial advisor will answer your every question and guide you throughout the way.