If you are a business owner and would like to apply for a loan, you may think that a bad credit will prevent you from getting the funds you want. Fortunately, thanks to lenders offering innovative solutions and unique products, this is not at all the case.
Why is it difficult to get a loan with a bad credit?
Imagine that you have owned a business for five years, and that it has grown well each year since its launch. Now you want to open a second branch in another city to increase your income. You go to your financial institution, talk to a representative and apply for a term loan to raise funds to open this new branch. However, if your credit rating is below 600 or 650 points, you will probably face a refusal. Most of the time, it's your credit record that the big banks review first to determine your eligibility for a loan. The overall success of your business and your sales will not matter if your credit rating is too low.
Other options are available!
Fortunately, even if the bank refuses you a loan, everything is not lost. There are several private lenders in the market that can help you by providing you with the financing you need, no matter what your credit rating. Thus, three products are offered to you, even with a bad credit:
Cash advance for merchants - This loan is based on the number of months or years of activity of your business and on your monthly card sales rather than on your personal credit rating, making it a more flexible option in the long term. The borrowing costs are payable only once, and there is no interest on the loan. For the refund, a percentage of your daily sales is taken.
Private Term Loan - This type of financing is a good alternative to loans from large banks (which are almost entirely based on the credit file). With the private term loan, you get the same benefits, but you make the refund in fixed daily installments. Thus, the risk is less great for the lender, so that your credit rating is not as important to him.
The Line of Credit on the Value of the Business - Finally, here is another product you can get even if you do not have a very good credit, especially if your business holds several assets. This solution can be risky as it involves putting a large part of your business at risk as collateral, but it is also a great way to get funds if your credit history is unsatisfactory.
Rebuild your credit file
In terms of business loans, the eligibility criteria are easier to meet, and you can use that product to restore your credit rating over time. By improving your file, you have access to other sources of financing, as well as lower interest rates. Even better, this type of loan is surprisingly affordable.
All businesses need funds in one way or another. Do not let a bad credit stop you! If you need money to expand a business, purchase equipment, or simply keep control over your business activities during a downturn, cash advance for merchants, private term loan and the line of credit on the value of the business are options to consider.
For more information about bad credit business loans, visit the ALC Commercial company’s website here