A few years ago, if you were a small business looking for financing, your only option was to go to a bank. And if you didn’t have stellar credit, you were pretty much out of luck.
Lately, there’s been a rise of companies that offer merchant cash advances and other credit-focused products.
Getting Start-Up Business Loans with Bad Credit and No Collateral
The future of credit-focused business financing is bright. According to Lantern by SoFi, “Lenders may use different credit scoring models to evaluate your creditworthiness.”
Lately, there’s been a rise in financial technology companies offering credit products like merchant cash advances and invoice factoring to small businesses with bad or no credit. There are numerous small business loans for bad credit. Here are some of the options for unsecured small business startup loans.
Online Business Loans
Business lenders online have been offering loans for entrepreneurs with poor or no credit since the internet made lending money to people with low credit scores possible. There are some great benefits to getting an unsecured loan like this, like not having to put up collateral.
Factoring can be a great way to get money for business growth, even if your company has a low credit score. It allows you to sell invoices at a discount to your suppliers and use the cash from those invoices as capital.
The rate of return on invoice factoring is pretty high. For some businesses, it can be as high as 75%.
Merchant Cash Advances
For businesses with low credit, but regular income, merchant cash advances can be an effective way to get financing. You can borrow against your future credit card sales for a short time. The whole process takes about 24 hours, and rates tend to be very low.
Businesses with low credit can still get financing for equipment leases if they can provide a strong business plan, cash flow projections, and enough collateral. That means renewable assets like real estate or intellectual property for many businesses.
You can always try to raise money on a crowdfunding site for smaller amounts of capital. Just remember that this type of business financing doesn’t give you any cash right away. Instead, it provides you with the funds after successfully funding and completing your campaign.
The Small Business Administration offers several loan programs for small businesses with low credit, poor cash flow, and other financial problems.
So, if you’re a business owner looking to get financing, your options have never been better—and the future of credit-focused business financing looks bright.
Credit Cards for Small Businesses
A credit card for a small business may have limited utility, but it can be helpful if you need to make unexpected purchases. Or maybe your customers prefer to pay with cards. While they’re not likely to offer enough flexibility (or credit) to keep you afloat, they could help take some strain off while you’re getting on your feet.
In conclusion, the future of credit-focused business financing is bright, and there are tons of options available to those with bad or no credit.