Funding for Businesses with Bad Credit History

Mar 2023

Jan 2025

Businesses need a robust cash flow to sustain their operations and generate profits. At times they may need to borrow funds to acquire resources, maintain operations, or grow. Unfortunately, various factors can adversely affect a business's ability to borrow from traditional financial institutions. These factors include having a poor credit history or insufficient credit history, missed or late payments, high debt-to-service ratio, bankruptcy, records of default, or simply being a relatively new business.However, there are many funding solutions available for Small Businesses that don’t fit the bank or credit Union model.These options are:

1. Merchant Cash Advance

A merchant cash advance is a financing option that offers businesses a lump sum cash payment in exchange for a percentage of their future credit card or debit card sales. This type of financing is best suited for businesses that require quick cash and have a high volume of credit or debit card sales.The primary advantage of a merchant cash advance is the speed and ease of accessing immediate cash funding. The process typically takes only a few days, and the funds become available within a short period.Business owners should take in account that although merchant cash advance is a convenient cash flow instrument and allows you to get funding within a few days, it may come with higher fees and interest rates due to their quick access to cash.

2. Invoice Factoring or Cheque Factoring

Invoice factoring, also known as cheque factoring, is a financing option that enables businesses to utilize their outstanding invoices in exchange for a cash advance that is immediately available. The lender collects payment from the business's customers and pays the business the remaining balance minus the financing cost. This type of financing is ideal for businesses with bad credit history since their ability to borrow is based on the creditworthiness of their invoice customers rather than the borrower. Businesses with long-term contracts, high-value invoices, or those needing cash to immediately purchase materials to fulfill high-value invoices should consider this type of bridge financing.Manufacturing, construction, transportation, and wholesale/distribution are businesses that can benefit from this type of financing to meet their immediate cash flow needs.The main advantage of invoice factoring is that the lender typically assumes responsibility for collecting payment from the invoice customers or payers. This can free up valuable time and resources for the business to focus on other aspects of their operations. Furthermore, businesses with long payment cycles, delayed payments, or long-term contracts that involve milestone payments can obtain the necessary cash to expand or continue operating their businesses immediately.Similarly to merchant cash advance companies, factoring lenders may charge a high fee for assuming the risk of collecting on the invoice and the time gap until the invoice is due for payment.

3. B-Lender Loans

B-Lender loans are non-traditional financing options provided by private equity firms or online lenders. These lenders are often willing to lend to businesses with bad credit or little credit history for various purposes. They understand the complexity and cash flow requirements of small businesses and work with them regularly. This type of loan comes in various sizes and forms, depending on the business needs and the business entity's qualifications and lending risks.B-Lender loans are a great financing option for start-ups, small businesses, seasonal revenue businesses, or those in urgent need of short-term financing. Traditional lenders typically require creditworthiness, good credit history, and collateral, but B-Lenders often have significantly more flexibility. These lenders are specialized in dealing with the complexity of newer and smaller businesses and can provide loans with less stringent due diligence processes and quicker turnaround times to meet business needs.However, it is highly advisable for borrowers to understand the terms of the loan and carefully review the terms and conditions before accepting them. B-Lender loans are less standardized and customizable and can vary significantly in terms such as repayment, interest, default events, settlement, and legal jurisdiction. Businesses should also be aware that B-Lender loans may come with higher fees and interest rates due to their higher risk tolerance.B-Lender loans can be a great option for businesses that are just starting or facing challenges with traditional lenders. These loans can provide flexibility, speed, and customized financing solutions to meet their specific needs. However, careful consideration of the terms and conditions and full understanding of the associated costs are crucial before committing to this type of financing.

4. Instant Payday Loans

Instant payday loans are short-term loans that can be used to cover unexpected expenses or emergencies. They are easy to obtain and are often offered by online lenders. Borrowers may receive access to immediate relief cash within hours, thanks to the quick and standardized approval process of the lenders that provide these loans.Instant payday loans are suitable for individuals with emergency cash needs or who need access to immediate cash to cover unexpected expenses. Some typical uses for instant payday loans include medical bills, car repair bills, and home repair bills. These loans can offer immediate cash relief to ensure a person has the cash to cover daily living needs to continue working and earning money.Payday loans can be useful for individuals who have low credit scores or limited credit history and may not qualify for traditional loans.Borrowers should know that instant payday loans typically have high interest rates and fees for their ease of access and quick approval process. The repayment period is often within two to four weeks. As these loans can be accessed quickly and easily with minimal documentation requirements, these could be beneficial for individuals who need immediate cash and don't mind the associated fees.In summary, there are various types of non-traditional lending and financial services available to businesses and consumers in Canada. These services can provide cash relief for a variety of situations, depending on the borrower's needs and qualifications.Merchant cash loans are suitable for businesses with high credit or debit card transaction volume and immediate cash needs. Invoice or cheque factoring can benefit businesses with valuable invoices with longer repayment terms. B-Lender loans are a great option for start-ups or small businesses with an immediate cash need to expand or maintain operations. Instant payday loans can provide relief for individuals with unexpected or emergency cash needs.Overall, non-traditional lending and financial services can provide valuable solutions for businesses and consumers with unique financial needs. It is also vital to approach them with caution and careful consideration of the associated costs and repayment terms. With the right lender and loan terms, these financial services can help businesses and individuals overcome cash flow challenges and achieve their financial goals.

February 25, 2019

January 24, 2025

The Top 4 Small to MediumSized Business Trends in 2019

Every new year brings new tools, techniques, and strategies that help small and medium-sized businesses succeed in an increasingly competitive world. Here are the top four business trends you need to look out for in 2019.

Cybersecurity

Cyber attacks are going to become a more common threat to small and medium-sized businesses. Everyone is a vulnerable target. Whereas many companies are actively preventing attacks, there will be a shift to proactive detection and response in the year to come.

Personalization

The personal touch is going to rein in 2019. Personalized marketing campaigns, transparency, and personal calls-to-action are going to be the ways to connect with potential customers.

Go Remote

The remote office is becoming increasingly a part of today’s business trends world. Small and mid-sized businesses can now reduce operating costs by rethinking their staffing strategies with the use of a remote workforce. With so many low-cost telecommunications platforms available, the days of the cubicle are now on the decline.

Reviews Are Key

Some business leaders resist social media use in the office, but social posting is a great way to connect with your local audience and get valuable reviews. Nearly 95 percent of shoppers read online reviews before making a purchase. It’s worth taking the time to gather testimonials and write case studies more now than ever.If you are looking to grow your business in 2019, there are alternatives to a traditional bank loan you should consider. For details on how you can get approved for a merchant cash advance, speak to one of our experts today.

December 14, 2020

January 24, 2025

5 Effective Ways to Solve Seasonal Cash Flow Business Challenges

The great majority of small businesses go under because of cash flow issues. You know the importance of cash flow for that reason. That doesn’t mean you don’t face seasonal cash crunches.Seasonal cash flow struggles are quite common, even among established businesses. You can take the strain off by employing these five effective methods of solving cash flow challenges.

Know Your Problem Seasons

The first step in combating cash flow challenges is know your problem seasons. For seasonal businesses, this may be obvious. If you run a golf course, you might find cash flow tightens up during the winter. If, by contrast, you have a ski club, then winter could be boom season for you.Knowing when you’re most likely to run into trouble can help you plan for those dry spells more effectively.

Shift the Timing of Financial Commitments

Once you know when your cash crunches are most likely to happen, you can work on scheduling around them. Try to shift any major financial commitments to other times of the year.This might include adjusting when you order stock or how you organize your tax year. A golf course may not want to make a major tax payment at the end of April, because funds are already tight.You may not be able to move every financial commitment, and that’s fine. By shifting some earlier or later in the year, though, you can make all your obligations easier to manage.

Offer Incentives for Customers to Pay Early

Another tip for meeting seasonal cash flow challenges is to entice customers to pay early. If you invoice your customers, you could offer them a discount if they pay before the indicated due date.You may encourage prepayment or even down payments. For example, if you run a mattress shop, then you could ask people to put a down payment on their purchase.You can make this a seasonal offer and encourage customers to “buy ahead.” With more money flowing in, you’ll have an easier time managing your cash flow.

Get a Merchant Cash Advance

Sometimes, the answer to cash flow challenges is credit. That’s particularly true of seasonal cash crunches since they’re usually temporary in nature.A merchant cash advance is one of the better choices you have to manage seasonal cash flow. With one, you get the cash you need against expected future sales. As sales take place, you’ll pay back the advance.

Diversify Your Business

One of the best ways to solve seasonal cash flow issues is to diversify the business. If you run a golf course, you might also operate a banquet hall. Acting as a wedding venue can keep cash flowing, even during the winter season.If you face seasonal challenges, think about the ways in which you can diversify and offer more to your clients all year long.

Get a Helping Hand with an MCA

If you’re feeling pinched, it might be time to get a merchant cash advance. Get in touch with the experts and discover what the right financing option can do for your business.

June 5, 2019

January 24, 2025

How to Expand Your Business with Merchant Cash Advance Benefits

Cash flow issues are a concern for most small and mid-sized business owners. In fact, many SMBs find it difficult to manage growth because of concerns about funds. Having access to the right funding makes it easier to support business growth. There are many different choices out there, but a merchant cash advance might be one you want to consider. Not convinced an MCA is the right choice for your business? Take a look at these Merchant Cash advance benefits and discover how MCAs could help you grow.

Lightning-Fast Access to Funds with a Merchant Cash Advance

One of the biggest benefits of an MCA is how fast you can access the funds you need to grow your business. Whether you need to cover a bill or you want to put a new marketing strategy in place, an MCA helps you do it sooner.Traditional loans can take months to arrive in your bank account. That’s after all the work of preparing your application and waiting for approval too.With an MCA, you could have the funds in your account in a matter of hours.

Think about the Future, Not Your Past

Most traditional forms of business funding rely on your financial history. Lenders will look at your credit score. If you’ve missed a payment or two, you might not qualify for a loan.An MCA is more forward-thinking. Instead of checking your credit score, the lender estimates future credit and debit sales.The lender then offers you a lump sum based on where you’re going, not where you’ve been. If your credit score is less than stellar, an MCA could be the right choice to help your business grow.You also don’t need to provide personal guarantees like you would with a loan.

Merchant Cash Advance Benefits Include More Flexibility

Flexibility is another reason to consider merchant cash advances for your expanding business.A traditional loan offers you a one-time, lump-sum payment. You’ll then pay the amount back with monthly scheduled payments.Merchant cash advances are different. Instead of paying the same fee every month, the MCA is repaid by a percentage of your credit and debit sales.If your sales dip one month, so too will your payment to the MCA. If you have higher than expected sales, your payment will increase too. This can help you pay back the MCA faster.This flexibility makes it much easier for a growing business to manage repayment. With merchant cash advances, you can stop worrying about making your loan payment.

Use Funds as You See Fit

With a traditional bank loan, you may have to tell the lender what you’ll use the funds for. Loan approval is then tied to buying equipment or investing in real estate.What if your needs change from month to month? Market conditions change quickly, and businesses like yours need to stay one step ahead.With a merchant cash advance, you’re in control of how the funds are spent. If you need to pay bills today and invest in a new website tomorrow, an MCA can make it happen.

Ready, Set, Grow

If you’ve been wondering how to fund your business’s growth, consider a merchant cash advance. The easy application process means you could have the funds you need in short order.If you’re not sure an MCA is right for your business, get in touch with us. We can help you discover the right alternative lending solution for your business.