When it comes to small business funding opportunities, credit is a major player. The best loans with the best terms come to those with the best credit. However, all is not lost if you are a small business owner with a bit of a credit problem. These things happen, and often the cause of the problem is the same as caused the need for financing. Perhaps receivables are not turning over as they need to, or maybe there have been some inventory issues. Whatever the case may be, there is hope.
This is an option if collecting receivables has caused a cash flow issue. The basic premise is that receivables are sold to a third part for a discounted amount, and the third-party then collects the full amount and keeps any profit. This not only provides instant cash flow for the small business owner, but also offers relief from the stress of receivables collection.
Merchant Cash Advance
While this is very similar to receivables financing, a merchant cash advance has to do with credit card processing. Basically the lender is providing funds in return for the proceeds from future credit card transactions that may occur. This is typically based upon historical credit card sales, and most often occurs with businesses such as restaurants and retail that do frequent credit card transactions. You can find a merchant cash advance in Florida as easily as you can find a merchant cash advance in California, and anywhere in between. The drawback is that the funds often come at an exorbitant interest rate, especially if made in a poor credit situation.
High Interest Rate Loans
Traditional loans are even option for some looking for business loans for bad credit. They will usually just have a higher interest rate than they would if credit was better. However, be certain to do your research and comparison shop, as there will still be some with better rates than others, and you want to get the best deal you can.
Financing can be a challenge for any entrepreneur, and credit issues can make it even more of a challenge. Fortunately, there are funding programs geared towards helping all types of businesses, including those looking for business loans for bad credit. Sites such as Biz2Credit.com automate the loan application process and can help you apply for receivable financing, merchant cash advances, small business loans, small business lines of credit, and many others to compare options and find the best for your situation. Biz2Credit has a relationships with 1,100 lenders, including banks and credit unions, as well as non-traditional lenders such as micro lenders, CDFIs, VCs, personal asset lenders, and cash advance companies, all specializing in small business lending.
This article was submitted by Faith Stewart. Faith Stewart has a BBA with a major in accounting and spent 10 years working in the various aspects of accounting and finance before pursuing her passion for writing.