When you don’t have good credit, it can seem like everything is lined up against you. The banks don’t seem to have any problem lending to business owners with blue-chip credit ratings and collateral all over the place, but if you’ve been in to see a traditional lender about taking a loan out for your small business, and you have any hiccups at all on your credit score, it seems like you have to jump through a ton of small hoops – and even then you’re likely to see your merchant cash application get denied.
Merchant Cash Advance Options For Bad Credit
While credit scores do give lenders a number to standardize the application process, it is also true that every credit score does not have the same story behind it. It’s true – some people just don’t pay their bills. They live beyond their means, month after month, and they pay the price because they can’t have access to any credit when they need it. However, there are other people who have solid spending and credit habits but have gone through such situations as a nasty divorce or a lengthy illness, and they fell behind on their bills – and their credit score hasn’t had much time to rebound.
Business cash advance bad credit
When you open up a small business, you’re taking a risk – but you’re also trying to make your own dreams into a reality. Maybe you had a vision for the next great fashion boutique, or the next great way to turn seafood into gustatory beauty for your customers. Once you get that business up and going for a few months, or even a year, and then you run into an opportunity to get that business over the next hurdle as far as growth goes, sometimes you need an infusion of cash. If you still have bad credit or have had some credit issues in your past, it can be difficult to pry those loan funds out of the hands of your bank.
That’s where a merchant cash advance can come in handy for business owners who are doing well and have a strategic plan – but need some funding to get to the next stage in their business. Remember that fashion boutique? Well, let’s say that you’ve been working in a fairly small location in a gentrifying area, but money is pouring in, but you know that you could really take off if you moved into that space down the street that is three times as large. However, the rent is higher, and you’ll need to hire a few more people to keep service where it needs to be.
Bad credit merchant cash advance
So you go to the bank, but they point to that repossessed car from three years ago. You and your boyfriend bought a car together, and he promised to make those payments, but he didn’t, and you didn’t know a thing about it until the tow truck showed up in the driveway to haul it off. Now that is a big hole in your credit report, and it will be for four more years.
Don’t let that keep you from expanding your store. When you take out a merchant cash advance, you’re not dealing with fixed monthly payments. Instead, the payments come out of the debit and credit card payments that you take in, and they are a set percentage. So if you sell $3,000 in clothes one day, and your repayment percentage is 10%, then you would get $2,700 from your sales, and $300 would go to the lender. If you don’t have a busy day, and you only sell $450 in clothes one day, then you only pay $45 to the lender.
The cost of the money is more than what you would face with a small business loan. If you take out a $50,000 merchant cash advance, you can expect to pay back between $60,000 and $70,000 in principal and fees. But if you have a strategic plan in place, and if you end up making a ton of money in your expanded store, it will have been worth it.
Once you know how you want to put your merchant cash advance to work for your company’s growth, get in touch with one of our cash advance experts. We will put together a package that helps you – and has payments you can afford.