Bankruptcies, defaults, and poor credit can cripple business owners. Poor credit and other issues have made securing small loans difficult for small businesses. In fact, only 27 percent of the 63 percent of small businesses that apply for loans actually get them. Will the black marks on your credit keep your business in neutral? Here’s what you should know.
Personal vs. Business Credit Scores
Personal and business credit scores are separate but linked. Personal scores range from 300 to 850. Business scores range from 0 to 100. Personal credit scores can be attained freely every couple months, but business scores must be paid for. Both personal and business credit scores track and record payments, any outstanding debt, tax liens, bankruptcy filings, or judgments. Unfortunately, lenders will look at both to determine if your business is worth the risk.
What Happens if My Credit Is Bad?
The hard truth is that bad credit can keep you from obtaining a small business loan from a traditional lender. Luckily, there are a variety of alternative business funding options that help merchants with bad credit attain loans.
Merchant Cash Advance. If you have a credit card, you could be eligible for a merchant cash advance. In this arrangement, merchants can get quick funds upfront and lenders receive a percentage of customer credit card sales.
Micro Lenders. This is a great option for merchants that won’t be approved by banks or don’t have weeks to wait for approval. Micro lenders will give businesses with low credit scores small ($3,000) to medium ($35,000) sized loans. Plus most micro lenders offer fast approval times.
Social Lenders. Kickstarter and other social lending websites have become a simple and effective way to generate capital. Entrepreneurs can reach out directly to their friends, investors and family for funds.
eMerchantBroker.com specializes in setting up bad credit merchant accounts. We have a streamlined application process that is user friendly. Our applicants don’t worry about VISA and MasterCard requirements or application fees. EMB bad credit merchant accounts enjoy competitive rates and 24/7 support.