Qualifying for financing can be a daunting task for the micro-business owner suffering from poor credit. In fact, we are only lucky to live at a time when the market is flooded with commercial funding products even for poor credit performers.
Accessing business funding become easier when non-bank lenders who are more willing to work with low scoring borrowers (unlike banks) joined the lending industry.
So what merchant loans bad credit options are there for small business owners? Here are three excellent solutions to consider.
- Short-term loans
Perhaps the reason short-term loans have become popular as a bad credit loan is their customizable repayment structure.
Short-term is more or less like the conventional term loans. The lender offers you a lump sum which you settle with fixed payments throughout a predetermined period. Only, these loans are shorter (most lasting 3 to 18 months) which ensures quick daily or weekly paybacks as opposed to the traditional bank loan’s per-month repayments.
Another advantage with Short-term loans is their low limits that range from $2,500 to $250,000 which are easy to settle, unlike bank loans that offer vast amounts. You are also sure to go through a stress-free application procedure with little paperwork. And lastly, you don’t have to wait months to have the amount you requested deposited to your account.
Anyone scoring 550 or above can access these short-term loans.
- Invoice financing
This option allows micro-business owners get advanced capital by providing their unpaid or slow paying invoices as collateral.
Invoice financing firms will readily work with bad credit borrowers because the invoices serve as security (if you don’t pay they can liquidate the invoices and recover their money).
- A business line of credit
Lines of credit begun with traditional banks but new-age lenders made them shorter, smaller and more available for business.
What a line of credit does is expose you to pool of funds which utilize whenever your company is desperate for cash. Interests are only payable on the amount you draw. And your line is refilled to its usual amount as soon as you’ve fully repaid your loan.
Business lines of credit are ideal for merchants seeking flexible financing, more so those experiencing irregular cash flow. The requirements include; not less than six months in business and at least $50,000 in annual revenue. Lastly, approval may be as quick as within 24 hours.
The bottom line
Blame it on your lack of dedication if you can’t find a loan because of poor credit. These are only the top three remedies; there are many more alternatives out there.
Author bio: As an account executive, Michael Hollis has funded millions by using alternative merchant loans bad credit solutions. His experience and extensive knowledge of the industry has made him a finance expert at First American Merchant.