If you’ve been using credit cards to finance your business, chances are your credit score isn’t excellent and you could probably still use more money for your business.
Whether you’re reading the Business Week story of James and Heather Hills, small business owners who paid 31% interest on a credit card to finance their small business, or the Entrepreneur article urging readers to “Know the risks [they] face before [taking] the plunge into credit-card debt,” it is evident that credit and credit scores can become a major obstacle when it comes to business financing.
According to surveys by the National Small Business Association, 44% of companies are financing via credit cards, up from 16% of small businesses in 1993. Accordingly, the percentage of small businesses using bank loans has dropped from 45% to 28%.
These numbers imply that there is a desperate need for small business financing, as financing a business using credit cards can eventually lower a small business owner’s credit score, and getting a bank loan with a less-than-perfect credit score, is virtually out of the question.
For business owners struggling with this predicament, a bad credit business loan may be the solution. Bad credit business loans, commonly known as business cash advances, can be attained by small business owners even when their credit scores are not excellent. This is because, instead of zooming in on a borrower’s credit score, business cash advance lenders use other factors to determine loan eligibility.
The most important factor to any business cash advance lender is a business’s financial performance. The higher a particular business’s monthly credit card sales, the more money that business can qualify to receive. Therefore, if a business does not process credit card sales, that business will not be eligible to receive a business cash advance.
Usually, a business must process at least $ 2,500 to receive the advance, and depending on the business’s monthly credit card sales, the business owners can be advanced anywhere from $ 5,000 to $ 500,000.
This money is repaid via the business’s future credit card sales. Meaning, a small percentage from each credit card sale following funding, is put toward the business cash advance repayment, until the entire amount has been repaid.
Should a small business owner desire an additional business cash advance following the completion of repayment (or after at least 60 percent of the repayment has been completed), he/she can renew his/her account, and have the account of his/her choice funded in 24 hours.
Bad credit business loans can serve as a sufficient alternative source of business financing for business owners whose credit scores have turned securing business funds into a virtually impossible process.
