For many small businesses, it’s an unwelcome fact: it can be hard to find a source of funding and working capital. This is especially true for newer businesses looking for the financial foothold needed to get going, but also for established businesses that need to adjust to changes in their market niche or operational plans. Small business owners are often told that bad credit (whether personal or business credit) contributes to major lenders’ decision to withhold financial support. This disparity has spurred the growth of alternative lenders such as Merchant Advance Capital.
Bad credit, though an indicator that can be used to point to inferences about a borrower’s likelihood of default, does not necessarily reflect badly on your business. It implies a risk, but one that does not eliminate the likelihood of finding a loan or other financial product to suit your business. Prospective borrowers with self-professed bad credit need to be evaluated by other metrics that take the specifics of their business position into account: this task falls to our underwriting team on a daily basis.
Many loans or forms of financial support targeted at small business owners with bad credit may also impose strict fees upon the borrower. We have realized that this structure is a significant limitation, one that prevents the building up of better revenue and credit over time. Access to capital allows businesses and their owners to support the growth or change they may need to stand more securely and independently in their marketplace in the long run.
If a major lending provider has declined your application on the basis of bad credit, you still have a variety of options. Customizing the evaluative approach as well as the design of a funding plan that does not put excess pressure on your stream of revenue will be important steps in building your small business’ access to capital.