The easiest bad credit business loans to get approved for outside of an equipment sale leaseback
Having bad credit is no longer a barrier to business owners seeking business financing. Traditional bad credit business loans generally require security deposits or collateral in the form of real estate or business equipment.
But there are now several very good bad credit business loan products that base approval more on how well the business is doing financially, then on credit and don’t require a security deposit or collateral in form of real estate or business equipment.
What we mean by “doing well financially” is that your business is producing sales. Since these loans are NOT based on your credit score, before we issue this type of financing, we want to make sure that you can repay the loan.
Why are these bad credit loans so easy to get approved for?
Because they aren’t “loans” in the traditional sense. They are “advances” provided to business owners based on their businesses past performance.
Also, these loans are generally paid back differently than traditional loans. The payback on these loans tends to be daily, weekly or monthly (for strong businesses). If your business isn’t making any money, then you would not be able to start repayment right away.
What kind of documentation is needed to process this type of short-term loan?
To get approved for this type of loan we will need the following:
- Last 3 – 6 months business bank statements (depending on the program)
- 3- 6 months Merchant statements (for Merchant cash advances)
If you need more than $100,000 you will need the following:
- 6 months bank statements
- Most recent business tax returns
- Balance sheet
- Accounts payable & Accounts receivable reports
Business Cash Advance Loans
Our most popular program is our business cash advance. These are short-term loans that look at your average monthly deposits into your business account as the basis of the loan amount. These deposits can be cash, check, and/or merchant sales.
That’s what makes this program so popular. It’s not just based on credit card sales, so our clients that don’t do a lot in credit cards sales can still get approved for this type of loan. Our minimum loan amount is $5,000
What can you use business cash advances for?
Business cash advance loans can be used for any business purpose. From working capital to payroll. Maybe you need to hire extra staff for an event or you need to travel to visit your suppliers or customers. As long as it’s used for business purposes, you can use this short-term bad credit business loan.
What are the requirements for a business cash advance?
- Time in business: 3 months
- Minimum monthly deposits $10,000
- Home based business approved
- Bankruptcies should be discharged at least 1 year
- Credit Score – some of our programs don’t require a credit pull.
Payback can be daily, weekly or for businesses that qualify, monthly!
What kind of industries use business cash advances?
Most types of industries can be approved for this short-term business loan. There are “preferred” industries. Which just means industries where we have seen the most growth. To see our full list of preferred, higher risk and prohibited industries, click here.
What kind of business SHOULD NOT use business cash advances?
If your business is not making money consistently. You should not apply. With daily or weekly repayment, you need a consistent stream of deposits. Also, these cash advance loans can become expensive. You want to think carefully about whether or not your business can support the repayment.
Some people call these loans the “payday loans of business financing”. Yes, they are easy to get approved for. But you don’t want to have to keep extending them if you are unable to pay.
Can you use this bad credit business loan for a startup business?
Yes, A startup is considered any business under 3 years old. While a day 1 startup cannot qualify, once you have had 3 months time in business you can qualify for this form of financing.
If you don’t have 3 months time in business, you may want to look at our secured business loan program. This program doesn’t require any time in business. Or our factoring program. Which is also open to a day 1 startup with bad credit. We have an unsecured line of credit, that doesn’t have a time in business requirement, but it does have a 650 credit score requirement.
Can you get this type of bad credit business loan with no credit check?
Yes, you can. But our no credit check business loan program is much more limited than our other business loan programs. With our no credit check bad credit business loan, you must:
- have 6 months time in business
- you must declare that you have not filed bankruptcy in the past year
- No more than 5 NSF checks in the past month
This loan program goes from $5,000 – $50,000. Home based business is ok.
How to qualify for a longer payback term under the business cash advance program
Most of these programs will start you off with daily repayment. Over time they may switch you to weekly. With repeat customers, we will consider doing monthly repayment based on how they handled previous loans.
Other factors that can help you to not just qualify for larger loans, but to be able to qualify for monthly repayment terms are:
- Time in business – 2 years or more
- Credit score above 650
- No more than 3 NSF checks in a month
- Being approved for larger loan amount such as $25,000 and up
Merchant cash advances (MCA)
Another popular option is MCA loans (merchant cash advances) these advances are based on your credit card sales alone. MCA’s are also short-term loans and depending on the bank/ financing company, the payback is daily, weekly or monthly.
MCAs as they are known as are popular with businesses that do a lot of credit card sales. Much like business cash advances, MCA loans don’t always require a credit check and are open to startup businesses. The amount you qualify for is based on your credit card sales. They will usually ask to see 3 – 6 months of your merchant account statements.
They will then advance you a portion of your average sales.
Keep in mind, all banks/financial companies have different lending criteria. So before signing up for any program, please read the loan requirements.
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Liz Roberts has been in the business financing industry for 20+ years. She got her start in banking, went on to consumer and commercial collections and then onward to becoming a senior credit analyst for several small leasing companies. She has also been a freelance writer for 15 years and has written about business and consumer financing on several blogs. She also maintains a low carb living blog.