How to Get Business Financing With Poor Credit

When the Tool Has to Fit the Business, Not the Other Way Around

At some point, almost every small business owner in Canada has looked at a business loan and felt the gap between what the bank wants and what their business actually looks like. Too short a history. Too small an ask. Too little collateral. Too much paperwork for too slow a process. The loan was designed for a different kind of business, and you were left to figure out something else.

That something else, for a growing number of Canadian business owners, is a merchant cash advance.

This is not about settling for a second option. In a lot of situations, a merchant cash advance is simply the better tool. Understanding why starts with understanding what most business loans are actually built for.

Business Loans Were Not Designed With You in Mind

Traditional business loans are structured around large capital needs, extended approval timelines, and borrowers who can prove years of consistent financial history. Many institutional lenders will not begin a conversation below a certain loan threshold, often $100,000 or more. If you need $30,000 to cover a cash flow gap between two contracts, or $50,000 to lock in a supplier discount before it expires, it helps to understand what alternatives to a business loan actually exist before assuming a traditional loan is your only path. 

The qualification requirements compound the problem. Banks want detailed business plans, multiple years of financial statements, personal guarantees, and often collateral. For a business that is six months old and generating solid monthly revenue, that history simply does not exist yet. The bank sees risk where the business owner sees momentum.

A merchant cash advance evaluates different signals entirely. Providers look at your actual sales volume, typically your credit and debit card transaction history, and use that to determine what you can reasonably receive and repay. The business you have built is the application. You are not being asked to prove what you might eventually become.

Repayment That Moves With Your Business

One of the most significant differences between a business loan and a merchant cash advance is how repayment works. A loan comes with a fixed monthly obligation. It does not matter whether November was your quietest month in three years or whether a large receivable is still outstanding. The payment is due, and it is the same number it was last month.

A merchant cash advance repays as a percentage of your daily sales. When business is strong, more gets remitted and the advance gets paid down faster. When business slows, the remittance drops accordingly. Your obligations shrink with your revenue and recover when revenue does.

For businesses that operate with any kind of seasonal pattern, this distinction is not a minor detail. A retailer carrying inventory into the holiday season, a contractor waiting on a draw schedule, a restaurant navigating the stretch between summer and fall: all of these businesses face months where a fixed loan payment creates real strain. The flexible structure of a merchant cash advance removes that strain, replacing it with a repayment rhythm that reflects how the business is actually performing.

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Accessible When You Are Just Getting Started

The businesses that most need capital are often the ones traditional lenders are least willing to fund. A business that has only been operating for a few months does not yet have the credit history or financial documentation that banks require. That does not mean the business is not viable. It means the track record has not accumulated yet.

Merchant cash advances are accessible to Canadian businesses that have been operating for as little as three months and are generating consistent monthly revenue. The bar is set around what you are doing now, not what you were doing two years ago. For newer businesses already gaining traction, that is a meaningful difference.

It also means that an MCA can be used proactively, before a cash gap turns into a crisis. Business owners who understand their financing options ahead of time are the ones who can move quickly when a real opportunity appears: hire before the busy season, lock in inventory pricing, or cover a short-term gap without pulling from personal funds or slowing operations down.

No Hidden Fees, No Runaround

One of the quieter frustrations with traditional lending is that the real cost of a loan often does not become clear until you are already committed to it. Fees buried in fine print, penalties for early repayment, and compounding interest structures make it difficult to know upfront what you are actually agreeing to.

2M7's approach is different, and that commitment is not just marketing. You see what you will pay before you sign, and that is all you pay. No prepayment penalties, no hidden fees, no financial gibberish. For a business owner trying to make a clear-eyed decision about capital, that transparency matters.

The Right Tool for the Right Moment

A business loan has its place. For large, long-horizon capital investments where extended repayment timelines make sense, it can be the right answer. But for the specific pressures most small businesses in Canada actually face, tight cash flow windows, seasonal cycles, growth that is moving faster than receivables, a merchant cash advance is built closer to the shape of the problem.

If you want to understand what an advance might look like for your situation, 2M7 is ready to walk through it with you.

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Around 50 percent of businesses will close their doors before their 10th anniversary. Rates of survival are different depending on the industry you’re in. Every successful small business takes some essential steps. If you want to drive success for your business, follow these tips.

Focus on Your Clients

No business can survive and thrive without customers. By focusing on your customers, you’ll deliver great service and delight them every time. Over time, this means better relationships with your clients. In turn, they’ll buy more and they’ll tell their friends about your business.

Make Marketing a Priority

Nobody can work with your business if they don’t know you exist. That’s why marketing efforts are so vital to small businesses. Invest in a marketing plan and get the word out. Ask your customers to give you a review, or use social media to promote your brand.

Hire the Right People

Working with the right team is another essential step for any small business owner to take. If your people are dedicated and passionate, they’re ready to help your business grow. They’ll also be able to deliver better products and services to your customers. A team that’s ready to go the extra mile is one that’s headed for success.

Use Technology to Grow

Whether it’s a mobile app or a new cloud server, the right technology can help your business grow. Successful small businesses use programs and devices that help them delight customers.The technology could help you cut costs and deliver faster service to your clients.

Find the Right Funding Options

Hiring an employee, buying the right technology, and implementing a marketing plan all cost money. Successful small business owners leverage alternative financing like small business loans or MCA to make it all possible.Discover more about merchant cash advances and other alternative funding options. One of them could provide your business with the funds you need to thrive in 2019.

If you’re an entrepreneur seeking affordable funding options for your business without giving up equity or being burdened by debt, Revenue-Based Financing (RBF) might be just what you’re looking for! RBF has been steadily rising in popularity among growth-stage companies, and for good reason; the flexibility and unique blend of equity and debt financing is changing the game as it keeps you in control every step of the way.But that’s not all. A whole world of revenue-based avenues, such as Merchant Cash Advances and Factoring are entering the scene too!In this article, we will dive into the world of RBF, its alternatives, and provide you with valuable resources to help you make an informed decision about financing your business.

What is Revenue Based Financing?

Revenue Based Financing is a new type of funding that combines the convenience of a business loan with the peace of mind of flexible repayment options. Instead of a set monthly repayment, RBF allows your company to trade a percentage of sales for start-up capital. This allows you and the investor, as it provides the funds you need without tying up valuable equity or incurring debt. Your investor can rest easy knowing that they will receive regular payments (though the amounts may vary) under a legally binding contract.

HOW IT WORKS:

1. Find an Investor

Venture capital firms, dedicated RBF investors, or angel investors are a good place to start.

2. Pitch Your Business

Present your business plan, financials and growth projections to the investor. Show them your intended use of the funds and your company’s potential for generating consistent revenue.

3. Negotiate Terms

If the investor is interested, this is where you will negotiate the investment amount, percentage of revenue shared, repayment cap, and anything else that is pertinent to the deal.

4. Sign on the Dotted Line

Once the terms are agreed upon, both you and the investor sign a legally binding document that outlines the specifics of the deal.

5. Put the Funds to Use

Receive your funds (usually in a lump sum), and put them to work in marketing, product development, hiring, or other areas that will propel your company’s growth forward.

6. Monthly Payments

As your business starts generating revenue, repay your investor based on the agreed-upon monthly percentage.

7. The Repayment Cap

Once you have hit the predetermined repayment cap, your obligation to the investor is fulfilled, and you retain full control of your business.

RBF Alternative: Merchant Cash Advances

If your business is retail based or receives a high volume of revenue from credit card transactions (such as a restaurant), Merchant Cash Advances may be a more suitable financing option. With MCA, you exchange a percentage of future credit card sales for the lump sum investment.

HOW IT WORKS:

1. Apply for MCA

Once you find a reputable Merchant Cash Advance provider, apply for funding using the above-mentioned information for your business, as well as your credit card transaction history.

2. Receive the Funds

Again, usually a lump sum.

3. Repay Via Sales

MCA offers a big advantage in that you have quick access to the funds, and the flexibility of repayments being tied to sales, which eliminates the need for collateral. However, MCA’s can be more expensive than a traditional loan, and the deduction from your daily sales may impact your cash flow for a time.

RBT Alternative: Factoring

Factoring is also known as accounts receivable financing or invoice financing. It may work best for you if your business is facing cash flow issues due to slow-paying clients. With factoring, you sell your unpaid invoices to a factoring company at a discount, and they take care of collecting the funds.

HOW IT WORKS:

1. Find a Reputable Factoring Company

Preferably one that specializes in your industry.

2. Sell Your Unpaid Invoices to the Factoring Company at a Discounted Rate

Usually 70-90% of the invoice amount.

3. Get Paid Upfront

The Factoring company will subtract their fees and pay you the agreed upon amount right away.

4. Invoice Collection

Now it’s out of your hands, and the factoring company takes care of collecting the overdue amount from your clients!

5. Receive the Remaining Balance

Once the client pays, the Factoring Company will send you the remaining balance, minus their fees. Factoring eliminates the need for you to waste time chasing after clients to pay their invoices, and gives you quick access to the funds, relieving your financial stress. However, like merchant cash advances, factoring can be more expensive than a traditional loan.

Choosing the Right Financing Option

After reading this article and looking into the different financing options for your business, you hopefully have an idea of which option is best for your business. Ultimately though, the biggest factors to consider are:

• Your Business Industry
• Your Revenue Model
• Company Growth Stage
• Repayment Flexibility

Once you determine those, you can make the choice that works best to propel your business forward! Revenue Based Financing is getting more creative and attainable as the structure of our economy evolves. It really is becoming the financing option of the future.