What if I can’t Get a Business Loan Because I have Bad Credit?

Face it, the chances of you getting a business loan if you have bad credit is pretty slim. It is even worse now that our economy has tanked. So what are we supposed to do when we really need the money?

The answer that many banks will tell you is "sorry, there is nothing we can do", and they would be correct. They can’t help it; it is the way the banks are set up. They lend you money based upon your good credit. So that begs the question – What are we supposed to do, close our business?

A few years ago a couple investors got together and figured a way to offer financing to business owners that have bad credit. They used the age old practice of receivables factoring and added a new twist; they advanced money based on the merchant’s credit card receivables exclusively and used their credit card processor to pay it back. It is called a merchant cash advance (or business cash advance).

This helped to minimize the risk of loaning money to people with bad credit and opened the doors to the vast majority of business owners who are looking to get working capital.

There are other advantages to a merchant cash advance as well

Not only did these investors figure out a way to offer funding for businesses that would otherwise not be eligible; they figured out a way to streamline the entire lending process. What that means is that instead of taking several weeks to get funding; a merchant cash advance takes only a few days. That is important to know if you need the money in a hurry.

Besides having bad credit; another reason a bank might turn down a loan request is because of insufficient collateral. A bank might be willing to overlook some of your credit issues so long as you put up enough collateral to cover the amount of the loan. This is generally in the form of real estate or a retirement account or anything else of value you might own. If you default on the loan; they have a right to those assets.

A business cash advance on the other hand does not require any collateral. Not everyone has equity in their real estate or a 401K with thousands of dollars in it. Even those that do have collateral don’t need to risk their personal assets just in case things don’t turn out as planned.

You are free to spend the cash advance any way you like

Many banks make you sign a letter of intent before finalizing your loan. Among other things; this letter of intent may seek to define how you will spend the money. If something comes up and you change your plans; you may find yourself in default. The chances of that happening are small but who would want to take a chance on that? With a merchant cash advance, you are free to spend the money as you see fit. It is your decision. Nobody knows your business like you do.

I hope this has given you a little insight into how a merchant cash advance works and offers a little relief for those of you who have suffered some setbacks due to this turbulent economy.

Use the following link if you would like to learn more about a Merchant Cash Advance.