Bad credit loans refer to loans that are unsecured for people with really poor credit. However, even without a high score, you can still get direct bad credit loans through alternative lenders. These firms mostly look into your business’s overall financial health, so a bad credit score would not affect much their approval criteria. Here are five bad credit loan options that you may find suitable:
This is a condensed version of the convention term loans from banks. Similar to a regular term loan or mortgage, you’ll get a certain amount of cash to finance the project you need funding for. You have to pay the principal, including the interest, based on the agreed payment schedule over a repayment term. Generally, in short term loans, you’ll pay it much quicker than a conventional term loan.
Business Line Of Credit
This funding option is different from traditional loans. Upon approval for a business line of credit, applicants with bad credit are provided access to funds to spend as they need them. The lines of credit work are almost similar to business credit cards. You withdraw the funds your business needs and only have to pay interest against the capital you’ve taken out.
Accounts Receivable Financing
It is also known as invoice discounting or invoice financing. It’s an alternative funding option that converts your outstanding invoices into immediate cash for small businesses. They serve as an excellent option for acquiring the funds you need when waiting to be paid by your customers. By considering the creditworthiness of your customers and your incoming invoices as collateral, lenders mitigate a lot of risk in lending to your business.
If your business needs replacing or adding new equipment, funding for bad credit business owners is still possible. These types of loans are typically secured through the material you are financing. That is why lenders don’t care much about your credit score because they’ll quickly recoup their losses by selling and seizing off the collateral.
Merchant Cash Advance
A merchant cash advance is not a form of a loan, but it serves the same function of helping you raise your working capital. Like equipment financing products and accounts receivable, applying for this alternative option with bad credit isn’t a bad idea because it generally secures itself. A merchant cash advance can be used for most kinds of general business purposes. If you have bad credit, there are many alternative business loans with affordable terms that you can apply for. Some lenders, like the five options mentioned above, can help you get the capital your business needs.