Your business’s access to operating capital is critical in order to take advantage of opportunities and handle unexpected expenses. Unfortunately, getting small business loans with bad credit can be next to impossible through banks. However, there are new financing programs now available that don’t focus on your FICO score as a leading indicator of your ability to repay. Business owners can now have access to the capital you need in as little as 48 hours if you know where to look.

Why Access to Capital Can Make or Break Your Business

Most banks stopped offering small business loans and lines of credit after the mortgage crisis of 2007.Banks that still offer programs can have loans that can be very difficult to qualify for, even with good credit. But today, getting small business loans with bad credit can actually be easier than you think. First, I’m going to share with you just how critical having access to business capital is for your business and then I’m going to share with you how to get access to funds.

According to Bloomberg 8 out of 10 businesses fail, and the number one reason is they run out of money. That’s the simple answer and clearly, something that often happens right before a business goes under. Five out of the top reasons are directly related to your ability as a business owner to have quick access working capital and here they are.

  1. Lack of Planning, Including Your Financial Needs.

    There are all kinds of unexpected situations that can arise when running a business. Your business can have an unexpected disaster. This hurricane season has reminded us that unexpected disasters can be devastating. If you don’t have emergency funds available, recovery can be next to impossible. Lack of planning your access to capital for more common reasons can also have devastating effects on your business. Simple things such as seasonal fluctuations in cash flow; unexpected turn-over in staff that requires more money for training; more marketing required due to new competitors entering your market, and the list goes on.

  2. Poor Financial Management

    Overspending in your small business can happen for lots of reasons. A few good cash flow months can give you the feeling that the trend will continue indefinitely. If this doesn’t happen, business owners that haven’t planned, sometimes find themselves short of operating capital. Other times business owners may feel that the only way to make money is to spend money so they spend their funds too aggressively on marketing or upgrades. Whatever the cause of over-spending, it can leave your business in a temporary position where you can’t meet your operating needs.

  3. Lack of Operating Capital

    In business, sometimes there are opportunities that come up that are just too good to pass up. An irresistible opportunity to expand to the space next door before it gets leased to someone else. The opportunity to buy a large amount of extra inventory at a fantastic closeout price. Businesses that have the capital to take advantage of these types of opportunities put themselves at a huge competitive advantage. Your business growth can be slowed if the capital you need isn’t there to take advantage of opportunities.

  4. Inadequate Inventory Management 

    Purchasing too much inventory can leave your business capital poor. Not having enough inventory can keep you from making the sales you need. Both problems can have devastating effects on your cash flow.

Small Business Loans with Bad Credit Is Difficult Through Banks

All lenders need to make some sort of prediction of the likely a borrower will be able to repay a loan. One good indicator that lenders have relied on for decades is your credit score. There is no doubt that your history of borrowing can give some insight into the likelihood of your ability to pay back a loan in the future, but there are other factors that can be relied on as well. These factors can make your FICO score less important.

A factor that can minimize risk for lenders when writing small business loans with bad credit is if your business has good cash-flow that is expected to continue. A lender can reduce risk by lending to businesses that have good steady cash flow and putting them on micro repayment schedules. Instead of monthly repayment schedules that can be hard for businesses to stick to, payments are broken up into weekly or even daily repayments. These payments are automatically withdrawn from your account. Withdrawals are limited to weekdays avoiding weekends and holidays. As your business receives daily deposits from cash and credit card sales the repayment funds become available. These small auto payments can feel more manageable to the borrower while providing less risk to the lender. Follow this link to compare financing options.

The Pros and Cons of Small Business Loans with Bad Credit

The pros are, businesses can qualify for these loans much more easily. As we mentioned, getting small business loans with bad credit can happen with these loans and you may even qualify if you have had a bankruptcy in your past. These loans can also be obtained with very little paperwork and they can fund in as little as 48 hours. Business owners can use this link to qualify now. The cons to these loans are that businesses will pay a higher interest rate due to the lack of full disclosure and a poor credit score. So when is this type of loan right for your business, let’s find out…

When It’s Worthwhile Getting Small Business Loans with Bad Credit

Small business loans with bad credit can make sense for your business. One key reason is if your business will make more money by getting the loan than not getting the loan. These loans can be of great benefit in situations such as…

  • opportunities that have an ROI that exceeds the interest expense of the loan
  • capital to finish a building contract before you can get paid
  • purchase supplies to finish a job

The key with these line of credit loans is using them to take advantage of opportunities that have short-term cash needs and then paying them back.

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