Owning a small business is not supposed to be easy. If it was then everyone would do it. But trying to run a small business with no credit or poor credit can be nearly impossible. The pressure of trying to pay bills and grow a business without credit has undone a number of entrepreneurs.
Part of the problem is the fear that having no credit or bad credit induces. Many business owners in this situation simply put on blinders. Convincing themselves that if they can make enough money they can work their way out of this situation.
While making money is important, it also takes money to make money. So not having the flexibility to get extra cash fast can force a small business owner to be too conservative in their approach. Eventually missing opportunities when they come knocking.
However, it does not need to be like this. A number of lenders who specialize in no credit loans have come on the scene in recent years. Lenders such as the San Diego-based Mulligan Funding, provide loans based on cash flow, not credit scores.
These loans can be used for working capital, inventory or even equipment purchases. Repayment is often flexible and can be made based on a percent of the day’s receipts. This allows a small business to borrow with confidence as they don’t have the stress of struggling to make a monthly payment.
Other advantages to a small business owner with no credit or poor credit include faster application and approval. In the case of businesses with no credit, the loan amounts tend to be smaller and are often used for emergency purchases or ramping up for a growth opportunity. As such, business owners need financing options which can be approved in a matter of hours, not weeks.
While these sorts of programs are not new, ‘alternative lending’ has only made it onto the mainstream in recent years. This was brought on by the financial crisis which saw banks and other financial institutions reduce their leveraged lending and small business activities.
In many ways, this was a blessing in disguise as mega banks are not well equipped to deal with small businesses, even when the owners have perfect credit. The void created by the withdrawal of banks has created opportunities for more flexible lenders to take their place.
Some of these financing options have been caught up in one of the hottest investment trends the world has seen since the dot.com boom of the 1990’s. That is Fintech. Don’t take my word for it. This New York Times article profiled how these lenders helped a small business owner when banks wouldn’t.
For small business owners with no credit or bad credit, these lenders have been manna from heaven. All they need is a business banking account, cash flow, and in some cases a merchant account – used for processing credit card payments. With these, a small business owner can get as little as $1,000 or more than $250,000. Granted the amount will depend on a number of variables, but this means that business owners with no credit now have place to turn to.
Another plus for small business owners is the sheer number of funding options out there. The commercial credit agency, Dunn & Bradstreet, has an excellent website called Access to Capital. This site provides in-depth information about a number of programs on the market today and even has checklists on what you will need to prepare for a potential lender.
This sort of information is extremely beneficial for a small business owner with no credit or bad credit as they can educate themselves about the options on the market today and how to apply for them. As such, the fear that comes with having bad credit or no credit fades away and the business owner can make decisions based on what is best for their business.
In the end, millions of small businesses with no credit or bad credit are finally able to get the funding they need to grow their businesses. This helps to strengthen our economy and our communities as these businesses will be able to grow, hire more people, and maybe even change the world.