Small business owners with bad credit are often rejected loans by banks and financial institutions due to lack of repayment guarantee. However, business owners with bad credit need not worry as there are plenty of other finance options from non-bank lending industry available on the market. Non-bank loans are becoming increasingly popular with small and medium businesses as availing loans from commercial banks is becoming tougher due to the lengthy procedures and strict eligibility criteria.
Today most of the public savings go to the non-bank industry than banks and other government authorized financial institutions due to the better ROI offered. Non-bank lenders aim at helping small and medium businesses to expand and grow by providing them customized business loans to suit various types of businesses. Availing loans in the non-bank lending industry is quick and easier than availing loans from banks.
Commercial banks consider good credit score as a primary requirement for approving loans apart from established years of business and collaterals. Small businesses with not enough cash flow into the firm can default loans availed resulting in a bad credit score resulting in rejected bank loans. On the other hand, non-bank lenders advance loans that are based on sales, equipment, and bills receivable while giving least importance to credit score. Bad credit loans aim at providing funds to business owners with bad credit where the funds can be used for various business purposes.
Most of the non-bank bad credit loans are secured loans which mean involves some security against the advance availed to reduce the risk for lenders. Having the loan secured will help the lender to realize the amount advanced to the borrower by the sale of the property guaranteed against the loan. However, not all businesses can pledge properties of the business to avail a bad credit loan. And what if the business does not have any assets on hand to pledge, will they be deprived of availing loans. Fortunately, there are merchant cash advance providers, a non-bank lending to advance collateral free cash for business owners with bad credit.
The merchant cash advances are secured against future sales of the business and not credit score of a business owner. The merchant cash advances are free from collaterals and guarantees and are approved based on sales of the company.
Any small or medium established business which accepts payments with credit or debit card towards sales is eligible to avail merchant cash advance. The cash advance is not a loan but advances against future sales of the company that is sold to the lender at a discounted price. The lender approves the loan amount based on the average monthly sales and sales forecast of the business.
The merchant cash advances can be availed by business owners with bad credit as the loans are based on sales and not on credit score. The loan can be applied online with the relevant documents to get approved in as less as 24 hours. The cash advance in deposited into the business account of the borrower within one week of approval which is fast compared to loans from commercial banks, making non-bank lending the better option for most!