How to Qualify for Business Funding with Bad Credit
One of the top reasons for business failure, especially during the early years, is lack of funding. While there are many reasons why businesses fail to qualify for financing, a common one is bad credit. Most traditional lending sources simply won’t touch a business that has bad or no credit. They categorize them as being “too risky” and turn them away.
Thankfully, more than ever before, business owners have countless options for financing that do not involve applying for a traditional bank loan. These alternative lending options are also hassle-free. Unlike the hurdles experienced acquiring traditional lending, your business can secure the cash it needs in as little as 24 hours.
With any financing method you choose to turn to, there will still be an approval process, complicated or not. To improve your chances of receiving the capital you need, consider the following tips.
- Find out what lenders are looking for
Each lender will have their own slightly different approval methods; each will also place greater weight on certain factors than others. The key is to know what the average lender is looking for when they go over your application. First, lenders will want to see that your debt is under control. They will want to see that you have a history of timely payments and a good DTI ratio. Second, they will want to see that your revenue is high and growing consistently. Lastly, they will check your cash flow. It should be positive and well managed.
- See if you meet the minimum borrowing requirements
Again, each lender will have their own minimum qualification requirements. However, most lenders’ will share these basic requirements. They will want to know how long you have been in business (preferably six months to two years). You might also encounter a minimum monthly revenue requirement of $10,000. Lenders will also want to see that your payments are in good standing. They will likely refuse to provide funding if you have a history of non-payment.
- Make sure your documents are organized
Every application will be different, but there are a few documents you should have together. Documentation lenders may request include:
- Proof of ownership
- Personal and business tax return
- Profit and loss statement
- Business licenses
- Voided check
- Property lease agreement
- Driver’s license
- Bank statements
- Debt schedule
Bad Credit Merchant Cash Advance
Now that you have everything together, you’ve increased the likelihood of being approved. As you search for the right financing options, don’t forget to consider a bad credit merchant cash advance. Ever-growing in popularity, the merchant cash advance allows your business to sell its future credit and debit card sales to secure the cash you need. A very flexible solution, this option is great for businesses that have a regular flow of credit card sales. Repayment is simply a percentage of your daily sales.
Ultimately, you will want to pick the funding option that is best for your business type and long-term goals. Following these simple steps will ensure you have everything you need to get approved as quickly as possible.
Author Bio:As the FAM account executive, Michael Hollis has funded millions by using bad credit merchant cash advance solutions. His experience and extensive knowledge of the industry has made him financeexpert at First American Merchant.