Today, small and medium businesses find themselves in a tough position Many businesses have been severely restricted or cut off from their traditional sources of capital, while at the same time needing this capital due to a difficult economy. Commercial Banks and the Small Business Administration have tightened lending standards while many businesses credit has declined due to hard economic conditions. Despite government efforts, banks are refusing to lend to 85% of the small business applicants, even if the credit is good and the fundamentals of the business are sound.
For many of these types of businesses, their only option for funding was to go to alternative lending sources of working capital. In this case, that could be a merchant cash advance. These companies often will provide a merchant “cash advance” based upon future credit card sales. These companies have great flexibility with regard to underwriting credit challenged scenarios, but also will have higher costs associated with borrowing the money. While these options can solve many challenges in receiving working capital in today’s restricted lending environment, it is important to remember that you may need to switch credit card processors to get approved for this type of loan. Fortunately, this is usually a painless process and can sometimes result in the merchant actually lowering their credit card processing costs.
Thankfully, there is a new, cost effective solution to this “bad credit small business loans” crunch. This new type of laon, called credit card receivable funding, is a lower cost alternative for bad credit small business loans. This new loan product features:
Capital Costs that are on average, 30-50% less than a cash advance.
No requirement to switch processors. Payments taken from Business Bank Account via ACH
Cash or Bank programs for those businesses that do not accept credit cards.
No new swipe equipment is needed
No Fees to apply or get pre-approved
Principal credit scores to 550
Approval in 2 business days, Funding in 7 business days.
Loan amounts as high $150K (may be higher on a case by case basis)
Loan Payments build business credit history.
This new option provides another way for those business owners who may have experienced difficulty during the recession to get the working capital they need to expand their business, pay down debt, or do just have the additonal funds on hand for any contingency or unexpected circumstance. Navigating the world of alternative business loans can be confusing. However, the key question you should always ask is, how will this loan help my business?