Yet, at the same time, financing, funding, and capital are critical for allowing small businesses to develop, grow, and thrive.
Lack of small business funding options has been cited by many entrepreneurs as a primary reason for the failure of about half of all small businesses within 5 years. But, there is hope, even if your small business has bad credit.
Bad credit business loans, and bad credit business finance, from alternative, non-bank lenders can allow you to access the funding you need, even with a bad credit score or limited business history.
How Bad Credit Limits Your Borrowing Options
Traditionally, many small business owners have only had a few choices for small business funding. Venture capital firms or wealthy friends of course are always an option. But for most small business owners, banks and institutional lenders were often the only game in town.
And the problem with that is that banks do not like risk. Sure, investment banking and playing the stock and options market are highly risky, but commercial banks – banks that lend money and have deposit accounts for customers – abhor risk.
Small business funding is seen as high-risk to begin with. So, naturally, banks and institutional lenders only offer small business loans and financing options to the “cream of the crop” – small businesses with exceptional credit scores.
That leaves 80% or more of small business funding customers out of luck, due to bad credit or credit that’s just not the best of the best. This restriction only got tighter after the financial crisis of the late 2000s.
Banks and institutional lenders became even more risk-averse, especially in terms of lending, and credit markets dried up considerably. This means many small business owners have had to look elsewhere for small business funding.
Fortunately, there are now companies that specialize in nothing but small business funding, and don’t have such an aversion to risk. Many of these non-bank lenders offer bad credit business loans and other bad credit business financing choices for small businesses.
Why Bad Credit Doesn’t Have to be a Barrier for Small Businesses
With the rise of these alternatives, non-bank lenders, bad credit no longer has to be an impediment to accessing credit and loans. Bad credit business loans are among the financial products that these companies offer.
They’re specifically targeted to small businesses with credit scores that would traditionally preclude them from accessing small business loans from a bank or institutional lender.
Because these lenders aren’t associated with a bank, they don’t need to maintain the strict, risk-averse stance or highly restrictive credit score requirements for their small business loans.
At the same time, many of these companies also offer reduced time-in-business requirements, and lower monthly revenue requirements than most banks or traditional lenders.
When it comes to accessing bad credit business loans and bad credit business finance choices, all of those factors can make it much, much easier to qualify and access vital capital.
That enables business owners to pay their bills, buy equipment, property, materials, inventory, and so on, undertake marketing campaigns, hire staff, grow their business, expand, and succeed.
Most of these lenders recognize that small businesses generally have less-than-perfect credit scores, and that’s it hard to improve your bad credit situation if you can’t access any credit or loan products.
They consider things like revenue and time-in-business as a way to paint a clearer picture of the risk involved with a borrower.
Where banks would simply draw a line and reject anyone with a credit score below 700 (or even higher in many cases), alternative lenders can look at revenue and time-in-business to offset bad credit scores.
The net result is customers with credit scores as low as 550 or even 500 in many cases can still qualify for bad credit business loans and other small business funding options.
Bad Credit Business Loans and Business Funding with Bad Credit
It’s worth pointing out that bad credit business loans, or small business loans for bad credit customers, are not the only option for bad credit business finance. While lines of credit are typically out of reach of bad credit customers, there are a few choices out there. Some are offered by alternative lenders, whereas others require partners or other funding sources.
In brief, these include:
- The aforementioned bad credit business loans
- Merchant cash advances, which are ideal for small businesses that do a lot of sales via credit or debit card transactions
- Credit partner(s), where some companies offer to co-sign for business credit cards or lines of credit on behalf of a bad credit customer, though this comes with significant risk
- Crowd sourcing of funding using online platforms
- Selling equity in the business to outside partners in exchange for an infusion of cash, which is often similar to or the same mechanism of small business funding used by venture capital firms and consortiums
- Taking personal loans, mortgages, or otherwise liquidating or leveraging assets for secured credit and loan products
Bad Credit Business Finance from BizFly Funding
For bad credit business loans, merchant cash advances, and other small business loan needs, bad credit customers can turn to BizFly Funding. BizFly Funding is a US-based non-bank alternative lender, focused exclusively on providing small business funding solutions.
These include bad credit business loans, unsecured small business loans, short term loans, debt consolidation loans, merchant cash advances, lines of credit, and more.
In terms of bad credit customers, the bad credit business loans from BizFly Funding are fairly easy to qualify for (especially in comparison to traditional lenders’ options).
The basic requirements are:
- Must be in business for at least 2 months at the time of application
- Credit scores should be 500 or higher, though applicants with lower scores, but higher time-in-business and monthly revenues, will be considered
- Monthly revenues commensurate with how much you want to borrow, usually with a minimum of $10,000 per month
To learn more, or apply online and get approved or pre-approved the same day, visit https://bizflyfunding.com.
