Are Working Capital Loans the Best Option for Businesses with Bad Credit?
If your business has been struggling and your credit score is low, you may be having trouble finding business funding opportunities. Small business loans from a traditional bank can be hard to get and it’s unlikely you would be able to secure a business line of credit either. There are plenty of opportunities for business with good credit scores, but how do you find loans for those with bad credit? In this article, we’ll discuss opportunities that will not only help you get the working capital you need but will also help you build your credit. This way, when you are back on track, your credit score won’t be holding you back.
If you are struggling, it may be tempting to turn to cash funding options, such as a merchant cash advance. While this is a fast way to get money, it often comes with steep terms like super-high interest rates and short payback periods. There are better options for businesses with bad credit.
What is a Working Capital Loan?
Instead of getting caught up in the merchant cash advance option, a better way to secure funding may be to get a working capital loan. Working capital loans are used specifically to fund operations on a day-to-day basis, as opposed to other types of small business loans, which can be used to fund long-term investments, such as in property or equipment.
Working capital loans cover business expenses like rent, insurance, salaries, utilities, marketing, and other costs of running the business. These types of loans are generally unsecured, which means that you don’t have to put any of your business assets up for collateral in order to receive the funds.
What Are the Benefits of a Working Capital Loan?
There are some benefits to using working capital loans to keep our business running smoothly.
Quick Money – Working capital loans are often funded very quickly. This can often mean the difference between staying in business or shutting the doors for a small business. When working capital runs dry, a business needs the approved funds as soon as possible. With a traditional loan, you may wait days or weeks to receive your money.
Easy Application Process – If you’ve ever applied for a small business loan, you know how much paperwork is required to secure a loan. Non-traditional lenders who offer working capital loans are able to use a much simpler application process that can be completed sometimes in less than 15 minutes.
No Surprise Fees – Unscrupulous lenders will often hide fees inside of complicated loan language. Sometimes you don’t realize how much you are paying in fees until it’s all over. Non-bank lenders are usually very upfront about their fees for a working capital loan, so you won’t have any surprises.
If you are a business owner and you’re running into problems with financing due to bad credit, a working capital loan may be a great option. ViewRidge Funding can help you understand your options. Give us a call at (888) 241-7241 or fill out our Get Started form today.