Cash Flow Financing And Cash Advances: Small Business Loans For Bad Credit

By Author: Stam Bett
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Obtaining small business loans when your credit could use some work is definitely one of the biggest challenges facing small business owners today. One option that is available to you, even with a low credit score, is something known as cash flow financing, which is based on your business cash flow. Another similar option is something called a merchant cash advance, which is based on your future credit payments. Here's an overview of these two options, both of which can give you the cash you need to buy equipment, expand your business, purchase inventory and much more.

What is Cash Flow Financing?
Cash flow financing is quickly becoming one of the most popular small business loans for bad credit as millions of business owners in the United States are hit hard by an economy that's still struggling to recover. Cash flow financing is a form of financing in which your loan is backed by your business's expected cash flows, unlike traditional asset-backed loans, in which your loan is backed by your assets.

Repayments for these loans are based on your projected future cash flow to make the loan more flexible, ...
... and these bad credit business loans are not based in any way on your personal credit, which makes it easier to qualify.

Option 2: Merchant Cash Advances
A similar option for cash-strapped small businesses is something known as a merchant cash advance. These bad credit business loans are an option if you already accept credit and debit card payments at your business by obtaining funding that leverages your future credit sales. Merchant cash advances are flexible small business loans that may be used to expand, renovate, advertise, upgrade equipment and much more.

Business cash advances can give you anywhere from $4,000 to $2 million in less than a week, depending on your credit. If you have bad credit, you'll probably only qualify for a maximum loan of $25,000 and you'll need a minimum of six months in business. If your credit is average, you'll need to be in business for nine months but you'll get more flexible repayment options and a higher loan. Business owners with excellent credit will need at least two years in business but they'll benefit from extended repayment options, much lower pricing and an even higher loan amount.

These two options combined are excellent for business owners struggling to maintain and grow their business, lending much-needed money regardless of credit problems. While banks require excellent credit for business loans, other direct lenders understand that your personal credit does not reflect your ability to run a successful business, and there may be many legitimate reasons for you to have poor credit. Both of these options will let you get the money you need, assuming your business is fairly established with positive cash flow and credit payments.

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