Have Bad Credit? How to Still Get Funding for Your Small Business
Your business credit score has a large impact on your ability to get funding for a small business. This is a major obstacle for anyone with bad credit. It’s also a problem if you don’t have much credit history at all. Banks are reluctant to take any risks when it comes to lending money to businesses without strong credit.
Alternatives to Bank Loans for Small Businesses
Because obtaining bank loans can be difficult, it’s worth investigating alternative types of small business funding. Here are a few options to consider if your business credit score is less than perfect.
- Personal Loans. If you can get loans from family or friends this is always an option. The downside is that not everyone has people close to them who can afford to lend them money. Furthermore, this type of arrangement can put a strain on friendships and family dynamics.
- Alternative Loans. There are companies that provide loans to businesses with less than pristine credit. Even with these financing options, however, there’s usually a minimum credit score in order to be eligible. Another issue is that interest rates may be very high. This type of loan can put a real strain on your business and cause you to accumulate bad debt.
- Crowdfunding. There are now many platforms where you can raise money for any type of project. You can post your business to sites such as Kickstarter and Indiegogo and raise money. This, however, is a challenging process as you’re competing with millions of other projects. You need to market your crowdfunding campaign very aggressively which takes quite a bit of time and expertise.
- Invoice Factoring. Invoice factoring is a small business funding solution that not everyone is familiar with. It lets you collect payments immediately on invoices owed by clients. This is a practice that can help you improve your cash flow and finance your business regardless of your credit score.
5 Advantages of Invoice Factoring
Here are five benefits to using invoice factoring to fund your small business and improve your credit score.
- Doesn’t Require Perfect Credit. Factoring companies check the credit of your clients. This makes it a good solution for newer businesses and those with a poor business credit score.
- Quick Access to the Funds You Need. Loans can take months to process and for funds to become available. With invoice factoring, you can receive payments within 24 hours.
- Establishes Credit. Invoice factoring can actually help you build credit. With better cash flow, you can pay off any outstanding debts and pay vendors and others on time. Additionally, invoice factoring companies often provide other financial services to help you improve your credit. They may, for example, offer services such as credit checks on your customers and invoice management.
- Reduce Expenses for Your Business. When you factor invoices, you can cut back on collection and administrative expenses. You and your employees can focus on more productive tasks as you outsource collections.
- Helps You Grow Your Business. With invoice factoring, you can enjoy a more consistent cash flow. This allows you to invest in your business. You can purchase more inventory, upgrade equipment, hire additional employees or make other necessary improvements to your business.
Invoice factoring is the ideal small business funding solution if you don’t have a great credit score. It’s equally helpful for businesses with strong credit.
Why Work with Riviera
Riviera Finance is one of the leaders in providing financial services to small businesses. To find out how you can improve your cash flow and credit with invoice factoring contact Riviera Finance