Business Loan Options For Poor Credit Applicants

David NayorSmall Business Lending

Starting a business can be very exciting. It can, however, also be daunting, especially when bad credit is an issue. But do not be discouraged: there are some routes to obtaining business loans for poor credit applicants that can reduce the difficulty of getting started. Financial institutions may offer various business loan options specifically for borrowers with poor credit.


Equipment Leasing

One of these options is collateral-based equipment leasing. By leasing equipment rather than buying it, the small business owner spends less for the equipment and gets access to important tax deductions through the Section 179 Tax Provision. There are lenders that will finance an equipment lease despite the fact that a small business owner may have weak business or personal credit. Lenders extend this option to business borrowers taking additional collateral either in the form of other equipment or real estate.


Merchant Cash Advance

Another alternative form of funding for small business owners (whose business is already established) is a merchant cash advance. These business loans for poor credit applicants provide the business with an immediate source of cash. No fixed payments are required from the business; instead, the lender receives an established percentage of credit card sales. In many cases, the lender is repaid within a year.


A/R Financing

Another option for poor credit borrowers who have an existing business is accounts receivable financing. This business financing option allows a company to borrow money from a lender to be paid back by accounts receivable payments plus a premium.


Securing necessary funding when starting or maintaining an existing business can be challenging for small business borrowers with poor credit. Seeking out alternative financing and equipment leasing business loans can help a small business borrower with poor credit to overcome financing obstacles. Though lenders will typically want to see some type of guarantee and may require fees and a higher interest rate, these alternative sources of funding can be a viable option for small businesses with a poor credit rating. To the business owner just hoping to get over temporary obstacles, these financing alternatives can provide a much needed solution.