Starting a Small Home Business

Bad Credit Small Business Loans How to Get the Working Capital You Need

July 10th, 2011 Filed under: Bad Credit Small Business Loans — Small Home Business Author

In this battered market many business owners find themselves having credit problems and end up having to look for bad credit small business loans. These retailers may attempt to get loans from the banks but do not get approved due to the further restrictions on business loans by the SBA and banks.

These retailers with poor credit often are forced to settle for a merchant cash advance, provided by the credit card processor. “Cash Advances” are neither regulated as loans, or are actual loans. Due to this, these companies can charge interest, or factor rates, up to 50%. These rates are not only unfair and abnormally high, but are partnered with a contract to buy a new credit card terminal and/or switch card processing companies, and an unfair upfront fee just so you can get the money.

Unlike an SBA loan or other traditional secured form of financing, these unregulated “advances” are not regulated by the same lending laws that govern bank loans. This means the rates can change upward during the payment period. There is a high risk of high “holdback” rates (ie. Payments) for these loans and can be a huge load for a struggling business to carry for months on end..

Many times, these “advances” are marketed as “unsecured loans” because eligibility is not predicated on securing against the owners personal assets. However, the cash advance company will most likely take a UCC lien out against your place of business for security purposes. If this happens, it means if the business for any reason is sold or liquidated the holder of the lien is legally entitled to a claim against proceeds of the sale of the business before the owner receives a dime.

If you are a small business owner that does not have the wherewithal to pay high, unfair factor or interest rates and high upfront fees, and still need a bad credit small business loan, there is a single, more cost effective, alternative. A CCRF (or credit card receivable financing) is a totally new type of regulated, true business loan and it features:

• 50-80% lower interest or factor rates over Merchant Cash Advances
• No fees or points upfront
• Keep the same credit card processor
• No contract requiring the purchase of new equipment
• Credit score for the owner can be no lower than 550
• Get Pre-Approved in under 48 hours
• Get funding within 7-10 business days
• A true, regulated business loan that builds credit, unlike a merchant cash advance