As explained by FICO, bad credit is a credit score of 300 to 629. Generally, bad credit is a typical reason that creditors turn down small-business loan applications. Consumers with bad credit scores are deemed at higher risk or more chances of defaulting on a loan.
Regardless, borrowers with bad credit still have financing options. It’s known and obvious that taking out a traditional bank loan can be very hard if you have bad credit. But the good news is that alternative or online lenders offer several business financing options for those with bad credit.
Some of these creditors require no credit score and consider factors like length of time in business and business revenue.
In this post, we’ve listed some of the business financing options for borrowers with bad credit. Read on to know more!
Merchant Cash Advance
Technically speaking, merchant cash advances are not a loan. To put it simply, it is a cash advance on your payment card sales in the future. Because of this, a merchant cash advance is, without a doubt, fitting for Business to Consumer retail operations such as hardware stores, car repair shops, restaurants, and so on.
At the end of every business day, take note that a small portion of your daily sales will be withdrawn and employed to the advance balance. In particular, it means that the total borrowing cost does not get larger if it takes a long time to clear the balance than anticipated.
Small Business Loans
Small business loans are long-term or straightforward short financing options with regular, fixed monthly payments. This funding option is also unsecured. Meaning, you do not have to pledge your personal assets or business as collateral.
No matter your precedence or choice might be, the government can find the best working capital loan for any borrower, whatever the credit score. If a business or company needs financing right away to pay for large expenses, borrowers with bad credit can turn to online lenders, like Glob Loans, for easy and fast options.
Due to the easier requirements, faster funding, and flexible terms compared to loans offered by conventional creditors, small business loans make it very simple to obtain funding options with better terms that help organizations from almost every industry to achieve any goal, specifically faults or flaws on financial histories and credit histories.
This type of funding option allows borrowers to buy the equipment right away; for example, technology, tools, machines, and more. In particular, the equipment that you need to increase profitability, onboard more customers, improve competitive advantage, and boost efficiency.
Equipment financing helps keep rates incredibly low. However, borrowers with bad credit will, for the most part, need to pay more interest.
Business Line Of Credit
A business line of credit is technically not a loan. However, most business owners take advantage of this funding option to cover temporary shortfalls and sudden expenses. The main advantages or upper hand of a business line of credit are the following:
Instant access to funding. Interest is only added or included on the principal. If the line of credit is revolving, then for future borrowing, repaid amounts are instantly available.
So, if you ever need fast money or find yourself needing immediate funding, then this funding option is the perfectContinue reading