Bad Credit Financing
When either you or your company has poor credit then trying to get outside funding can seem almost impossible. But with a little research and know how, you may still be able to get the money you need to start or expand your small business. Here are a few ways to get financing with bad credit
Reduce the risk of granting a loan. Banks and financial institutions may be hesitant to grant you a loan because they see the investment as a potential loss. In the event that you default on your payments, the lender needs to be sure that it will make back the money it lent out. Therefore, try to find someone who is willing to be a cosigner on your loan. Additionally, you could try to increase the amount of collateral that you using as a security.
Apply for a bad credit business loan. There are many companies out there that will offer your business a loan even if you or you company has bad credit. Simply do a web search for “bad credit business loans” and dozens of companies will show up. But be aware that these loans carry very high interest rates (usually in the range of 20%).
Lease your equipment. Some business owners may think that they need to own all of their company’s assets, and they invest a significant amount of capital trying to acquire everything that the business needs. However, by leasing their equipment instead of purchasing it, business owners can free up their working capital which can then be used to operate and grow their company.
Seller financing. If you are looking to buy a new business, then seller financing is something worth investigating. Sellers of small businesses usually allow the buyer to pay some of the purchase price of the business in the form of a promissory note. Sellers will usually finance between one and two thirds of the sale price that can be paid back with interest over several years.
Invoice factoring. This form of financing (also referred to as accounts receivable financing) is a great option for your company if you are looking for a way to free up the capital that is tied to customer invoices. In this case, a business sells its outstanding accounts receivable at a discount to another company who provides instant payment.
Business cash advances. A business cash advance is based solely on future credit card transactions, so credit history is generally not a factor for approval. The cash advance company purchases these transactions at a discount and provides your business with instant financing. The money is then tranfered to your business with no interest and or restrictions on use.