Merchant Cash lender
Good credit means a lot in this world, from buying a house, a car, and in this article a business loan.
There is a large percentage of the population of businesses that have credit scores between 550-620 despite having strong cash flow, however, there are ways to obtain a small business loan with bad credit that is reaching out to a Merchant Cash lender.
At VIP Capital Funding, Man of our financial products do not care about the borrower having bad credit, as we care more about your liquidity and cash flow, but even then we encourage our clients to improve credit score their credit score to obtain loans with lower interest rates.
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Paying off a business loan with no late payments is both beneficial to the borrower and lender, but even more beneficial to the browser as it will boost the client’s Dun and Bradstreet which a credit model for business, and in many cases boost your FICO score.
Short Term Merchant
I really, you want a short-term merchant cash advance between 6-12 months in which you can utilize for short term problems as the loan is renewable every time you are 50% paid down. With the bank loan although not renewable and no prepayment history, you have a lot more time to strategically allocate the funds to help strengthen your business when deployed in the correct spots.
In many cases having a 550-620 credit score isn’t even bad for small business, because the quality of their tradelines are stronger. For instance, a business owner takes a $50,000 loan and misses a few payments while an employee for a company has a $2,000 credit line and misses no payments.
The business owner’s credit score is lower than the employee with a $2,000 credit line who has a high credit score, but the key difference is that the business owner is utilizing 25 times more capital. Before writing this article even further, and you really need to get something removed from your credit report, in my grand opinion seek a good attorney, not these sites that charge you $30-$100 a month. It is best to have a personable attorney; one phone call away.
Having bad credit isn’t the end of the world as many business owners go into debt with their revolving credit limit to pay off business expenses and keep capital working in their business. You must be extremely careful in this approach because the interest rates from the credit cards will eat you alive financially but if you follow your instinct and vision it will pay off, not only your business being rewarded but your financial debt will be settled.
This puts you in a position to repeat the process more comfortably or bite off a little more working capital to further grow your business. Speaking from personal experience as the owner of VIP Capital Funding, Personally, I went all-in with $40,000 cash and a $20,000 credit line as purchasing power. Within 4 months I was in debt -$10,000 bur there was this instinctual feeling to keep going and not giving up.
My company made the proper adjustments and within 3 months after being in debt -$10.000 I was positive +$50,000. This may sound risky to some, but that is all part of being an entrepreneur. The “why’ was stronger than the will to not fail was not an opinion.
Every day, every 14 hours of the day my time was dedicated to my business. This is the mindset you must have as a business owner. Not only do you need to be smart with your working capital but you also need to have courage in being able to strategically deploy the funs/
What does this mean for you as a reader? It means the journey of having a successful business is tough, you may have all the dreams in the world but if it isn’t followed up with day in and day out the action you will fail. That is why when you get the opportunity to obtain a small business loan at a firm like VIP Capital Funding you must make sure the deployment of capital will you, otherwise you will be left even further in the hold in which you began.
Cash Flowing Businesses
This also leads me to strong cash flowing businesses between $50k-$250k. There may be things on your credit report that are keeping you from getting a good business loan, and it can take 7 years just to get it off despite the strong revenue that you are producing to get it off. VIP Capital Funding specializes and helps these types of businesses as well.
Our consultants push our clients to at least push for a 650-credit score to obtain a bank loan because many of our clients have credit scores between 550-620. Don’t get me wrong, a small business loan from a bank also has its pros and cons as well. Starting with the pros it is longer-term, more money, and a monthly payment schedule.
As for the cons, it can be deceptively expensive as the loan can balloon over time and a 15% APR equates to 50% interest after 5 years; not to mention the pay payment penalty, unlike a merchant cash advance where there is none. Point blank, there is a cost for everything, and this includes the cost of borrowing money, make no mistakes about it.
Improve Bad Credit
Lastly, let’s touch upon collateral which in which even if you have bad credit, the chances your loan will be improved high because you’re putting up your assets such as marketable, inventory, cars,s, and owner-occupied real estate. The pros of this include being able to receive more capital to the borrower and also having a low-interest rate.
This can seem like an attractive financial product for some especially for those with bad credit because they wouldn’t be able to get a large amount of capital anywhere else. The cons here are that the bank places liens on the assets for the amount of capital you want to borrow, and you are largely restructured from borrowing more capital. Also, as entrepreneurs, we take calculated risks and get paid in direct correlation with the problems you solve.
I am Joshua Triplett, Principal Managing Partner of VIP Capital Funding. We are a leading firm that provides consulting services to small business loans, low-interest business loans with bad credit business with easy approval.