Small business owners with bad credit will find it very difficult to obtain a traditional business loan. Whether you need to purchase additional inventory, move locations, or repair some critical equipment, there will eventually come a time when you need some extra working capital. When you reach that point, you may want to consider an Unsecured business loans for bad credit. In this article, we will discuss a few of the most common types of unsecured loans that are available even with poor credit.
Merchant Cash Advances
Merchant Cash Advances are interesting because they are not “secured” in the traditional sense of a loan. That is, you don’t have to put up any collateral to get working capital. Instead, you get a lump sum of funding from a merchant cash advance lender. Then, the lender is repaid the purchase amount by taking a set percentage of your daily credit card payments or by debiting your business bank account a specific amount each business day. The main benefit of this is that your repayment is income-based. If your repayment is based on a credit card split and your volume increases, your repayment of the cash advance will occur faster. And, in contrast, if your sales slowdown, you don’t have to worry about failing to make a fixed, monthly payment – the lender still only takes the agreed-upon percentage of sales.
Business Lines Of Credit
Business lines of credit can function similarly to a business credit card. Essentially, you’re given a certain amount of money, and you can borrow up to that amount – as long as you repay the amount you borrow, plus interest. For example, if you apply for a business line of credit, and use $5,000 out of a $10,000 credit line, you’re only responsible for making payments on the $5,000 that you are currently using. This makes business lines of credit very flexible.
Know What Option Is Best For You!