Financing Solutions – Bad Credit
Financing Solutions for business owners with poor credit
Trying to attain financing for your small business is hard enough without the added challenge of having poor personal credit. When seeking a small business loan, poor personal credit may overshadow even the strongest business financials. This is especially true when working with traditional lenders. What are your options if you find yourself in such a situation? It is possible, even with poor to bad credit, to use alternative financing to access capital. A merchant cash advance just may be the light at the end of the tunnel. Before granting funding, both traditional lenders and alternative funders will closely examine the FICO score(s) of the business owner(s). However, when working with an alternative funder, they will weigh other factors before denying the request for capital. If the business has a fairly healthy recent financial status, showing signs of growth, profitability, and/or stability, the probability of obtaining a merchant cash advance (MCA) is relatively high. Rather than focusing on old, outdated bank formulas, MCA funders are looking for a 3-month snapshot to get an understanding of the current state of the business.
How do Merchant Cash Advances work?
You may be asking yourself, “How is it that a business with a FICO score as low as 500 can attain funding?”. Consider the following: Has the company been in business for at least 5 months? Does the business have a monthly gross revenue of at least $10,000? If so, the business may qualify for a merchant cash advance or line of credit with an alternative funder. It is important to understand that factor rates and terms may vary from business to business depending on information gathered at the time of submission.
How do FICO scores of 550-660 measure up?
Traditional lenders, such as banks, shy away from low FICO scores. Alternative funders, with a few basic requirements, can provide working capital, with reasonable payback periods, to business owners with poor credit. With a merchant cash advance in place, businesses may enjoy the gains that working capital can provide.
How about small business loans for FICO scores of 500?
With alternative financing, businesses with a poor FICO score may obtain large funding amounts with reasonable payback periods. If the business is more than one year old, the probability of funding up to $250,000 with a term of 12 months or less, is very possible.
Let’s talk about small business loans/advances for FICO scores of 500
Not many lenders will even consider a FICO score of 500. However, if the business is at least 5 months old and shows great financial potential, it is possible to obtain funding as high as $20,000 with a term of 5 months. Such an option is a can be a God-send for borrowers with rather poor credit scores. It is especially useful for borrowers that require fast cash while also having bad credit. Businesses that need cash fast, can obtain working capital in as little as 3-5 days, to resolve immediate financial difficulties.
How much financing do you qualify for?
A number of factors are considered when evaluating a business for financing. The amount of funding a business can expect to receive may depend on the industry type, monthly gross revenue, average daily bank balance, and a number of other economic factors. During the Underwriting process, the MCA provider will typically fund between 50-1000% of the average monthly deposits, as found in the business bank statements.
What happens once the loan/advances has been approved?
Once the advance has been approved, the business will receive funding either through wire transfer or ACH deposit. Generally, there is a fee to wire funds. Greenbox Capital charges a $45 wiring fee. This fee, along with the daily debit amount, is agreed upon by the borrower, prior to funding, and is deducted directly from the business account.
How come bad credit gets financing?
It sounds too good to be true that a business with bad credit can access financing. Lenders that aren’t willing to finance a bad credit borrower are not looking at the credit in relation to the likelihood that the borrower can manage the funds. However, the alternative funder considers several factors before approving or denying the loan/advance. There are many reasons that a borrower may end up with bad credit score, these reasons are not listed in a credit report. MCA Funders understand that going by the face value of the report may not provide a clear picture of the borrowers’ past. For example, the bad credit scores may have been obtained years before the borrower ventured into business ownership and doesn’t necessarily reflect the borrower’s ability to repay the loan/advance. Greenbox Capital understands that just because a small business has bad credit that doesn’t mean that it is fairing on poorly. Sometimes a business may opt to manage its bills in a way that it prioritizes some and lets others eat into their credit score with the hope of succeeding in business in the near future. In such instances, the business may get a poor credit rating even though the business is not really suffering in the actual sense. A business owner may have a poor credit score and yet manage to have a financially sound business overall. In such instances, merely looking at the credit score may not be favorable for the business. However, if the overall strength of the given business is taken into consideration, financing may be possible even with the low rating.
Why it is hard for traditional lenders to lend/advance to low credit score businesses?
In many cases, small businesses find it hard to obtain capital from traditional lenders/funders. This is due to a number of reasons. One of these is due to the fact that banks have to adhere to strict lending guidelines. Because of this, there is a need to have documented support as to why a given business is entitled to receive a given loan/advance.
What are some of the things that may impact your loan?
There are a number of factors that may impact your loan/advance besides your credit score. Other factors may include time in business, cash flow, number of monthly deposits, positive and negative banking data, monthly revenue, average daily balance, and whether there are any outstanding business loans, amongst others.
Should you consider a business loan/advance with your bad credit?
When faced with bad credit and an ailing business, you may wonder if it is a good idea to obtain a small business loan/advance. If your business is in serious need on financing and doesn’t access funding, chances become high that it may collapse overtime. This is because it becomes hard for the small business to successfully remain in operation with little or no working capital to assist. The business owner(s) may have bad credit score(s) and yet maintain the business in good standing with plenty of potential to succeed in the future. Such businesses can clearly benefit from alternative financing given to bad credit scorers.
So why choose us?
There are a number of reasons to choose Greenbox, some of which include:
- We provide the most competitive rates
- We don’t require hard collateral on small business loans/advances
- We provide a wide range of bad credit financing options
- We have a flexible payment structure
- Funds will be deposited in your bank in a short period of time
What about start-ups?
As much as supporting small businesses is our pleasure; we are unfortunately unable to give small business loans to start-ups. We will only consider established companies, with at least 5 months in business and an average $10,000/month gross revenue. Before you give up, research on any number of web based lenders that do have options for such scenarios.
Small business grants with bad credit
There are numerous grant options both online and offline for businesses with bad credit. Unfortunately, this doesn’t always mean that the available grants are obtainable if you are both a small business and a business with bad credit. There are a number of funding options available to small business owners depending on factors that are considered during the Underwriting process.