Now that you know that you can still get a business loan despite your bad credit, it’s time to explore this topic more. There are different types of business loans that can tease you, but it would be wise to know what these are before you decide. You won’t know what’s best for you if you don’t know the nature of each one. Keep reading as we lay down the best business loans for people who have bad credit.
Best Business Loans for Bad Credit
Make sure to read each type of bad credit business loans below, and then filter what could work for you and discard those which will not.
Invoice Financing
This type of loan is based on how much your customers owe you – that’s why it is called invoice financing. You can borrow money and you would pay for it once your customers have paid your invoice. It is recommended if you want to borrow money and you are desperate for it, but you’re expecting late payments from your customers. You can use the borrowed money to pay for your staff or purchase supplies.
Commercial Line of Credit
It is also known as “business credit” or “commercial credit.” This type of loan is considered a pre-approved fund that you can use and allocate to your financial obligations. These obligations could be capital expenditures, working capital needs, inventory, and more. You can pay a Commercial Line of Credit once you have funds.
Inventory Financing
Inventory financing is a type of credit that you could use to pay for products or supplies that aren’t for immediate sale. It is only valid on products that you will stock for future orders. It is effective in keeping a steady cash flow, updating product lines, and increasing inventory supplies. If you’re a small business with no other loan options, inventory financing could work for you.
Equipment Financing
If you still have equipment missing from your business, this type of business loan could be the solution. If you’re planning to purchase business-related equipment and you don’t have funds, you can apply for equipment financing. This is one of the best loans that might be suitable for startups that don’t have enough funds for their equipment.
Merchant Cash Advances
This one is a tricky type of business loan. Merchant cash advances work by borrowing money today in exchange for your sales tomorrow. This is typically ideal for business owners who are really in need to hold funds today but don’t have enough cash. Based on its name, you’ll advance your credit today and exchange it with your future sales but with a discount, depending on the terms of your lender.
Takeaways
Now that you know the different types of bad credit business loans you can apply for, you can start looking for a lender and inquire about the aforementioned types of loans that would fit you perfectly. Just don’t forget to familiarize yourself with your lender’s terms and conditions before you finally decide. What’s more important is that you already know that it’s still possible to level up even if you have bad credit.
