Do you need access to working capital but have difficulty obtaining it because of derogatory listings on your personal and business credit reports? Derogatory listings refer to collections, foreclosures, bankruptcies, late payments, tax liens, judgment lien, and judgments in general. All these have a negative impact on your overall credit reporting.
In such situation, it’s important not to fall into desperation. There is a way out. This article is going to discuss a number of options you can use to get business funding even if you have derogatory listings on your credit report. What are these funding options?
- Accounts Receivable Factoring
The gist of this type of funding is that a factoring company buys up your outstanding invoices and advances about 80% of the amount back to you upfront. As soon as your clients pay in 30-90 days, you’ll be provided the remaining 20% of the receivables minus a discount or convenience fee, which usually makes up 3%.
- Cash Advance or Alternative Business Loan
A merchant cash advance can be defined as a purchase of your future credit card receivables in exchange for providing a lump sum about upfront. This type of financing features a fixed payment schedule with shorter terms and higher costs as compared to a traditional loan. To easily get approved for a cash advance, consider turning to a reputable business loan provider and high risk payment processor like First American Merchant. FAM offers its popular Cash Advance to merchants of any type. First American Merchant is an award-winning company that boasts an A+ rating with the BBB.
You can use sites like Kickstarter, Indiegogo, and GoFundMe to obtain working capital required for growing and developing your business.
- Friends and Family
You can turn to your family and friends to get some capital to fund your growing business.
- Purchase Order Financing or Vendor Line of Credit
The lender will pay your chosen vendors directly for the operational materials required for your business. As soon as these materials are received, you make the sale and your customers make their payments, the lender gets paid from part of the revenue, including various fees for their services
- Real Estate Hard Money
Even if you have bad credit, you can turn to hard money lenders if you need to get funds for some real estate deals. These lenders give approval based on the value of the project.
- Secured Credit Cards
These cards don’t have a credit requirement as they require a deposit up front that is used as collateral for your line of credit. As it’s in the case of a normal credit card, you must make payments on what you’ve borrowed keeping funds separate from what has been used as collateral.
- Trade Credit
Trade credit can be characterized as an agreement between a vendor and a business, thanks to which the business can make payments after the products or services have been provided, e.g. 30, 60, or 90 days later.
Bad credit or derogatory listings on your credit report don’t mean the end of the world. Don’t lose your hope. You can still obtain financing for your business so to grow it and take it to new heights.