Poor Credit & Merchant Cash Advance

If you’re a small business owner in need of quick access to capital, and you have poor credit, you may have encountered challenges. The traditional lending arms like a bank or independent financial institutions will often rely on credit scores to assess your lending eligibility. Unfortunately, this means that businesses with poor credit may face loan denials or less favourable terms.

There is a financing option worth exploring, a merchant cash advance! Merchant cash advance providers are often more willing to work with businesses that have poor credit. Unlike traditional loans, you repay your merchant cash advance based on a percentage of future sales, making the borrower’s credit score less of a concern for lenders.

It’s important for businesses with poor credit to approach merchant cash advances with caution. Before diving into this type of financing, carefully consider the terms and conditions. It’s worth noting that merchant cash advances are typically costlier than traditional loans, with interest rates and fees that can accumulate rapidly. The repayment structure of a merchant cash advance can also pose challenges for businesses with irregular cash flows. Seeing that your repayment is tied to future sales, this means that slow periods of income can at times make it difficult to meet payment obligations, which can lead to cash flow issues.

You must weigh the pros and cons of a merchant cash advance for your business before deciding on this option. Consider partnering with a knowledgeable lender who specialises merchant finance. Their expertise can guide you through the process, helping you find a commercial financing solution that aligns with your business needs.

If merchant finance doesn’t sound like the finance option you’re looking for there is other financing options available to businesses with poor credit. For instance, invoice factoring, this financial product allows businesses to sell outstanding invoices to a factoring company in exchange for immediate cash. This is suitable for businesses waiting for payment on outstanding invoices.

Demystifying Credit Checks for Merchant Cash Advances

One of the advantages of merchant cash advances is that they typically do not require a credit check for approval. Unlike any kind of traditional loan, MCA providers base their funding decisions on the future sales potential of a business. This makes MCA’s a form of alternative lending that focuses more on a business’s revenue rather than the borrower’s creditworthiness.

Since MCA’s fall under the category of unsecured business loans, the approval process is faster and more accessible than that of traditional loans.

It is worth noting however, while credit checks may not be mandatory for a merchant cash advance; some lenders might review the credit history of the business or its owners as part of the application process. This assessment helps lenders evaluate the risk of providing funding and determine suitable loan terms.