Choosing Your Bad Credit Business Loan

Bad credit is the last thing you want to have, especially if you’re a business owner seeking business funds.

Even before our country went into a recession, it was hard for small business owners with credit scores under 700 to get bank business loan approval. Now, as bank lending may slowly be beginning to start up again, after coming to what seemed to be a screeching halt, a small business owner has to have a near-perfect score if he/she wants to get bank funding.

One website that focuses on business financing informs readers that lenders look at the risks involved in making your loan and those risks are going to be determined according to your credit history. The site states "If your personal credit scores are below 640 you are going to need excellent business credit scores to get approved for business loans."

This is true, which is why many of the business funding options available to business owners with bad credit come at high costs. Since lenders who offer funds to bad credit risks make these higher risk loans, they tend to charge substantially higher interest rates or require a significant amount of collateral.

According to an article, "Business Funding Options for Bad Credit Risks," "The trick is to fund your business in ways that actually get your score back on track so when you're ready to move your business to the next stage, your score will start opening doors rather than getting them slammed in your face."

I know what you’re thinking - This all sounds fine and dandy, but how do I do this?

In his article, writer Asheesh Advani poses three business funding options for small business owners with less-than-perfect credit scores. One; look beyond credit cards and banks, two; relatives and friends and three; micro-lenders and web-based lenders. But I would like to pose a fourth option; the merchant cash advance.

The merchant cash advance is a method of business financing that has been nick-named the "bad credit business loan." It earned this nick-name because merchant cash advance lenders posses the ability to provide funds to merchants with less than perfect credit scores, due to the fact that an advance is based on the business’s monthly credit card sales.

There are various reasons why a person may have a poor credit score. These reasons include constant inquiries, not paying bills or credit cards on time or not paying at all. But just because one’s credit score may be low, does not mean that his/her business does not perform well.

That is why merchant cash advance lenders use a business’s monthly credit card sales to determine how much money they can lend to a particular business owner. They also rely strictly on a business’s credit card sales for repayment – a small percentage is automatically deducted every time a customer makes a purchase using a credit card.

Times are changing, and bad credit no longer has to prevent a small business owner from receiving funds for his/her business. If you are a business owner with a less-than-perfect credit score the merchant cash advance just might be right for you.

Bad Credit Business Loans
Choose a bad credit business loan.