WorldExecutivesDigest | 8 Major Types of Business Loans for Bad Credit | When you have hit a financial dead-end, borrowing money can be pretty stressful. However, if you have a lousy credit score, this might become even more daunting. But, lucky for you, there are several bad credit loans available to help you sort out your situation.
Meanwhile, research shows that the lending market for peer-to-peer loans in Australia is about 183.7 million U.S. dollars. This shows you that taking loans is a common habit all over the world. As such, having lousy credit can affect your chances of taking a loan. However, if you know the different types and how each type can help you, you can make the right choice today!
Types of Loans You Can Get With Bad Credit
Indeed, the process of taking a loan with bad credit is much more complicated than taking one with a good score. However, you still have eight options that you can look into to see which is the right option for you. And, they are listed below:
Business Credit Card Loans
One of the easiest ways to take a loan with bad credit is using a business credit card. This is because, in addition to getting a chance to boost your credit scores, you get a lot of access to rich capital. So if you have a stellar idea for a start-up business, you can use a business credit card to take a loan.
Short Term Loans
Yet another excellent option for those with bad credit loans is to take a short term loan. And as the name suggests, these loans extend anywhere from 6 months and go up to 24 months.
Short Term Lines
Short term lines are somewhat identical to short term loans. And the only difference between the two loan types is that short term lines are centred around credit cards instead of instalment loans.
Next, you have invoice factoring that small or start-up businesses can convert their unpaid receivables to cash. These companies work by purchasing unpaid invoices for a certain percentage and determining the value. And this is usually around 80% or 85%.
Invoice financing is also fairly identical to invoice factoring. However, this is a financing method that is short term. In this type, you will purchase the invoice with the previous process, and the finance company will give you its value.
With invoice financing, you will be the sole member responsible for amassing payments from the clients and repaying the respective loans.
As the name suggests, this is usually used to buy specific equipment needed for your business. For example, if you own a bakery, you might need to purchase ovens. And by using this loan, you can buy the equipment you need and will also be using this as collateral.
If you do not wish to take a loan for vast sums of money, microloans will be the perfect option for you. These types of loans are usually provided to business owners from underprivileged backgrounds.
Merchant Cash Advance
Last but not least, you have a merchant cash advance. And, you are eligible for a merchant cash advance if you own a business that mostly accepts credit card payments.
The lender will give you a massive sum of money in this type of loan and collect a small percentage of funds from your everyday sales.
The bottom line to this feature is that bad credit loans can be a huge disadvantage to business owners. But there are specific solutions to help you out. The loans mentioned above might be a tad bit more challenging than taking a standard loan. However, they still exist to help you find your way out of financial difficulties.
Meanwhile, before you decide to apply for any of these, you need to consider your needs, requirements, and repayment abilities to repay the loans with ease!