‘Bad credit score’ isn’t something to be ashamed of, and there can be multiple reasons behind it. From failure to make payments of time to choosing the wrong credit card, the list is never ending. Business owners with a bad credit score find it hard to qualify for a term loan by a traditional lender. Now alternative lenders see how business owners struggle with a bad credit score and they are offering term loan to provide aid. Apart from a credit score, a lender can look at many other factors such as business plan, credit history or tax return documents to evaluate the creditworthiness of the borrower.
While applying for a small business loan, one might think that what makes a credit score so important? Basically, lenders use a credit score to determine your ability to make the repayments on time. If you have a low or poor credit score, you are a risky candidate and lender will think and look at your credentials twice before lending you a loan. If your credit score is in between 300 to 499, you in the boat of a bad credit score. A bad credit score doesn’t mean you have closed all doors of financial aid; you can apply for a business loan to fill the financial gaps even with a bad credit score. So, if your business is struggling due to miscalculation and mismanagement of cash flow or due to a bad economy, we have good news for you – take help from the term loan and get back into the game.
What is Term-Loan?
With application and approval process term loans are easier to apply. If you need to invest in a bigger project but don’t want to disrupt the cash flow and working capital, then a term loan can work for you! Generally, a term loan is an amount ranging from $20,000 – $1 million, and it is paid back every two weeks or once a month depending on the schedule set by the borrower and the lender. A borrower can have access to a term loan in as quickly as 48 hours giving the opportunity to grow business instantly. From three types of a term loan, short, medium and long, you can choose the one suits your business and financial needs. The final cost of the loan including an interest rate depends on the current and past financial history of the borrower. Most business owners apply for a term loan because you can qualify even with a poor credit score. Evaluate your business needs and pick one to term loans to take ensure business growth.
Advanced term loans for Business owners with Bad Credit
Now that you know the basics, let us look at the types of short/long-term loan that can help you and your business out:
- Lines of Credit
Lines of Credit are the first short-term you can avail. It works in similar ways like a credit card but instead of a credit card, cash is involved. The lender offers a lump sum of the money to the borrower and can tap into those pool of funds whenever needed. Alternative lenders offer lines of credit on flexible payment terms and lower interest rates. You are eligible for a line of credit if your business is 6 months old and has annual revenue of $50,000. This funding option gives you an opportunity to invest in a wide range of businesses and gives you the liberty to tap into funds whenever and wherever you need.
- Merchant Cash Advance (MCA)
MCA is second on the list, although this is an advance, not a loan it helps solve all the financial problems. Here, the lender has access to your credit card sales and takes money from it till all the debt is cleared by the lender. MCA is among the most approachable and expensive funding options. With quick access to funds and easy approval, you can get a loan from $2,500 to $250,000. It is suitable for a multitude of business purposes; the only drawback is that it comes with a higher interest rate. If you think you can manage it, this term loan has proven to be beneficial.
- Invoice Financing
Invoice Financing is the best funding option for a business owner who has a drawer full of outstanding invoices. Through this, a borrower is able to get an advance up to 90%, and with an interest rate of around 3%. Here, the loan terms depend on the time of the outstanding invoice. As the interest rate and approval process depend on the pending invoices, the borrower doesn’t have to offer a plethora of financial documents and even collateral. Use the funds to meet your financial demands.
Ways to use Term Loans to run a successful business
Now that you know about mechanics of term loan and multiple loans you can apply for even with bad credit, you can use those funds in the following ways:
– Don’t let a slow season affect your cash flow. Relax and take a breath because a term loan can help provide streamline cash flow in the hour of need. So, if you need to restock your shelves for the coming season, apply for a term loan without disrupting the cash flow.
– Do you ever put a hold on your business dream because you are afraid of applying for a loan because of a bad credit score? Now you can apply for a term loan and introduce a new product line. With this extra stream of money, you can also offer additional services if you are running a food business.
– Need extra staff for the coming season? The funds from a loan can give you access to enough money that help you find the perfect employees for your venture. You can even use the money to train your employees so that your business can keep on running smoothly.
– Now that you have enough money, why don’t use it to buy new equipment for your business? From a copier to a blender, a delivery truck to construction machinery you can buy everything.
These are only some ways you use the term loan to your benefit. Be creative, play with the loan and give your business a boost even with bad credit.
Now that we have provided you with every option, head over to our website, apply for a term loan. For updates and funding options for bad credit scorer, you can follow us on Twitter (@Onlinecheck) and Facebook (@Onlinecheck). If you have any query you can call us on a toll-free number at (833) 827-4412, our loyal and keen financial advisor have your back.