Every business requires a funding injection from time to time. Perhaps to finance business expansion, see it through a tricky sales period or to acquire inventory or equipment.
Traditional providers, such as banks, may have rejected you application. The question then is where do you turn to obtain that critical capital?
Whatever the reason for your initial failure, there are lenders who are willing to advance the funds required to any legal business. It’s a matter of finding the best match for your specific needs and situation.
What makes my business high risk?
There are two different ways of assessing the risk factors of any business. The approach depends on who is doing the assessing – a traditional lender or a merchant account provider.
Traditional lenders such as banks, place a high priority on factors such as a high credit score, any previous repayment history and current levels of debt or borrowing.
Merchant account providers rank some industries as high risk, regardless of a banks lending criteria. Businesses engaged in the adult industry and e-cigarettes are just two examples but travel, automotive and furniture are also considered high risk.
What is really important to all lenders?
First and foremost, all lenders are in business to make a profit. Their underwriters look closely at every application to weed out those that represent a risk of default on the loan.
The single most important thing they look for is capability to repay the loan plus the agreed upon interest.
Conventional lenders, such as banks, tend to focus on personal credit worthiness. More forward looking financiers look at the business, how solid it is, and how well it can afford to make repayments from its sales and cash flow.
What alternatives to a bank loan are available to me as a business owner?
After the banking crash of 2008, banks really tightened up on their lending policies for small businesses. This created demand in the markets that was met by supply created by inventive and innovative companies and individuals.
The financial products they created have fallen under the banner of Alternative Finance.
The new alternative markets grew and flourished. Now they are everywhere, supplying finance to a vast range of businesses from the highly successful to those who may be struggling a little.
Leverage your future sales to obtain the finance you need today
One of the options available to businesses is to leverage a portion of their potential future sales in exchange for some up-front capital.
The basic model consists of deducting a small portion of each transaction to repay the lender, which reduces the balance owed, over time.
There are many variations of this basic model. The opportunity we describe here is specifically for businesses that have a merchant account.
Even businesses that have a high risk merchant account can leverage it to obtain finance.
Benefits of a merchant cash advance from a high risk merchant lender
Because you repay a percentage of every credit card accepted, you pay when your business is earning money.
This is especially suited to seasonal businesses or those that experience the occasional highs and lows throughout the year.
Usually, the capital received is a fixed amount. If it takes longer to repay than originally projected, then it means you could pay additional interest.
The funds raised from this type of business loan can be used for any legitimate business purpose.
What do I need to obtain a merchant cash advance?
Acquiring banks want to know that any loan they advance will be repaid, plus the agreed interest charges. That amount includes their profit margin.
Therefore you need to demonstrate that the loan has a very high probability of being
The best indicator that a business can repay such a loan is by having a solid sales record that shows no signs of diminishing.
For a merchant cash advance, the ongoing reliable income generated by accepting credit cards indicates that your business will continue to flourish. These sales represent the income stream needed to satisfy the lender. A portion of these sales will be used to repay the agreed upon amount, until the loan has been fully repaid.
Can I get merchant cash advance with a poor credit record?
Yes. Lenders in this field look first at your business and its revenue stream. That’s because repayments will be made from each and every sale that is paid for by credit or debit cards through your merchant account.
This means that your personal credit history is not as important as the strength of your business sales.
Where to start to obtain finance from a high risk merchant lender
If your current merchant services provider is unable or unwilling to make a cash advance to your business, then it’s time to talk to the experts.
Our role here at SecureGlobalPay is to match borrowers and lenders for this type of alternative finance. It’s part of the service we offer because we specialized in building a network of reputable high risk merchant account providers.
Half the battle is knowing which provider to approach for your specific requirements and industry. That increases your chances of success in obtaining a suitable funding solution.
Your next step to raising the capital you need from a high risk merchant lender
Start today by telling us about your business and what it is you are looking for and why.
Click here for our online application form or call us on 1-800-419-1772 to speak with one of our payment finance experts.