08 Apr Terms: 48 Months
Money Used for: Portable Digital X-Ray System
If you’re a business owner who has bad credit, you should know that FICO scores between 300 and 629 are more common than you think. But many traditional lenders still view these low scores as a sign that you might default on your loan payments. According to the U.S. Small Business Administration, 63 percent of small business owners seek funding from big banks, but only about 27 percent succeed in getting a loan.
If you’re a member of the majority who gets rejected, you still have options. There are more and more alternative lending sources available to business owners who have a less-than-great FICO score. There are also many work-arounds that allow you to borrow money or establish lines of credit for your business. Here are some that we recommend.
Merchant Cash Advances
Let’s say your company has regular, reliable credit card sales that make up the bulk of your revenue stream. Despite this steady business, you personally have bad credit. In this case, you’re an ideal candidate for a merchant cash advance. This kind of program gives you upfront cash in exchange for a fixed percentage of your credit card sales. The repayment percentage varies from lender to lender.
Most banks offer revenue-based loan programs that allow you to borrow roughly 10 percent of your business’ annual gross deposits. The bank will track how much you deposit into your business account and calculate your allowable monthly loan accordingly.
This approach has three significant benefits. First, it usually takes a week or less to get approved and funded. Second, you don’t need to put up collateral or submit tax returns. Third, the bank incrementally collects repayment from your account.
Web-Based Lenders and Microlenders
With a little digging, it’s easy to find reputable, non-bank lenders. Often these web-based and nonprofit lenders offer microloans that average $13,000. Their interest rates are generally reasonable. Lenders report repayment to credit bureaus, giving you the opportunity to improve your credit by paying back your loan on time.
Some business owners prefer traditional lenders. If you’re one of them, consider bringing on a business partner to act as a credit partner. This person should have impeccable credit and be willing to take on the risk of co-signing loans and other lines of credit with you.
Don’t let your bad credit stop you from applying for a business loan. CMS Funding provides low-interest business loans and approves candidates in 24 to 48 hours. Fill out our quick applicationto find out if you qualify for one of our programs. For candidates who are concerned about their credit, we also provide merchant cash advances. Call us today at (855) 793-8637 for more information.