post by:
Michael Goldstein
If you have a low credit score from personal finances or a bad business decision, you may have some trouble securing a loan. Don’t worry! We’re here to tell you about the best funding options available, even for eCommerce sellers with bad credit. Credit scores aren’t the only thing that lenders look at, they consider your sales projections, too. You just have to know where to look and who to approach with your business plan.
Can You Get A Loan With Bad Credit?
Any number below six hundred is considered a “high-risk” score. However, it is still possible to get a business loan with bad credit. Of course, you would have more options and better interest rates with good credit, but if you need the money now, there are lenders willing to work with you. Keep in mind that there are many options that don’t even require a credit check. With this in mind, let’s explore the best funding options for your eCommerce business.
Inventory Financing
Inventory financing is useful for those who need assistance stocking their inventory. The lender will offer a loan amount that depends on your inventory value and credit history. Just because you have bad credit doesn’t mean you won’t be approved. It just means that your agreement won’t be as good. Often, they will only give you fifty to eighty percent of your inventory’s value, but it’s an excellent option if you can’t find funding elsewhere.
Credit Card Cash Advance
If you’re building your credit score back up, it can be hard to put the debt back onto the credit card you just paid or create more debt than you already have. But it is a good alternative if you can’t get funding elsewhere. The downside of a credit card cash advance is the high interest. They will charge you when you pull out the cash, and depending on the credit card, they will charge you high rates. It doesn’t require a credit check, however, so you can take advantage of the opportunity if you need it.
Merchant Cash Advance
A merchant cash advance is an option to consider if you want flexibility. They don’t dictate how you’re spending the money on your business. They take a percentage of each credit and debit card sale and put it toward the debt you owe. Your company only needs to be operating for three months before they will consider you. Your credit score is not always a factor in their application, it’s simply a matter of finding the right company.
Microlenders
Microlenders are non-profit organizations that help business owners, like yourself, get access to much-needed money. The loans range in amount, but are usually on the smaller side. Your credit score may or may not be a factor in their application process, as there are several microlenders across the county, each with their own unique guidelines. A good option for those who can’t find traditional funding.
Business Line Of Credit
Instead of accepting a lump sum that may take years to pay off, you can get a line of credit. You can pull from this account each time you need the extra cash. Credit limits and interest rates range, depending on your credit score and business history. Sometimes the drawing period is limited to a certain amount of time, others are available as long as you need it. Lines of credit can be long-term solutions, especially for companies that benefit from revolving credits.
Crowdfunding
Crowdfunding is a group of people coming together to fund a particular project. Investors will loan their money to the specific business in hopes of making a profit. This is not always the case, and is a risky approach. Instead of reviewing the person or business credit history, they listen to your sales pitch. On the positive side, you don’t have to pay back the money you borrow if your business fails.
Bad Credit Loan
Bad credit loans are comparable to traditional loans with one crucial difference. The interest is high. It’s to be expected when these companies are giving their money to high-risk clients. Bad credit loans often come from small lenders. Traditional banks won’t usually gamble their money on businesses with bad credit. The contracts differ from one another. It all depends on the company and your unique situation.