Bad credit loans are very difficult to get, but there is hope. One option is the “merchant cash advance." It is not actually considered a loan, it is an advance on the future credit card sales of your business.
This is how it works. A finance company, not a bank, reviews the monthly credit card processing statement of your business to what your dollar volume hase been over the past few month.
Based on the amount of your monthly credit card processing they will fund you between 1 and 1.5 times the amount of your monthly processing and take a certain percentage out of your processing each month. The length of the payback varies, but is usually between 6 and 12 months, so it is a short term loan.
The reason why the payback period is short is because of the risk associated with bad credit loans. Additionally, be forewarned, the payback rate or interest rate is high because of the nature of these loans. Always see if you can get traditional bank financing first. Also, if you are looking to purchase equipment, find out if you can get financing from the equipment company, since they often have relationships with equipment finance companies. Equipment financing or equipment leases are usually less expensive, but depending on how bad your credit is, you may not qualify for equipment financing.
If you are considering a merchant cash advance and have a bad credit rating way all the factors before you make a decision. Look at the pros and cons carefully. Also, if you need some advice and referral for a merchant cash advance feel free to contact me to see if you qualify for merchant cash advance to solve your immediate cash needs.
I can also offer you other financing solutions and would be happy to save you money on your current monthly credit card processing costs, my primary line of business. If you have been in business for 1 year or more, have a minimum credit score of 500, at least $100,000 in revenue in the past 12 months and no bankruptcy in the past 24 months there are better funding options you should consider. Some lenders, like OnDeck Capital will approve loans to a business that a bank will not approve (affiliate ad link).
Some of OnDeck Capitals requirements are: Although OnDeck Capital can loan to over 700 different industries, there are some industries they cannot loan to such as payroll companies, recruting-temp-staffing agencies, marinas, firearm sales, pawn shops, adult entertainment, drug paraphernalia and dispensaries.
Regarding the negative references about the cost of bad credit loans, only you can make the decision on whether or not the cost of the loan outweights the benefits you will receive from utilizing the money your receive. If your business is expanding or you have an emergency need for cash you may have no choice. Another reason may involve a large order you need to fill and need the additional inventory or you may need to hire extra staff to keep up with your growingbusiness. There can be any number of reasons you may need a merchant cash advance, but only you can answer the question, “Is the short term cost of this loan worth it?"
If your business is rapidly growing in sales volume, you are adding new customers and you cannot keep up with the growth, then quick financing from a merchant cash advance is a good solution, in spite of the cost. This is especially true if you are looking for a relatively small loan amount and pay it off quickly.
Keeping customers happy is vital to the success and growth of the business. Losing one customer can have a ripple effect that can cause you to lose additional customers and harm your business reputation. Keeping customers happy and maintaining your business relationships may justify the extra cost involved in taking a credit card processing loan, especially if you have a bad credit history.
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