Small business owners with bad credit find almost every door to financing slammed in their faces. Nobody wants a bad business risk. He is vulnerable and the vultures take advantage of him by offering him cash but on Shylockian terms. A trader who finds himself in this unenviable position must be patient and refrain from making rash decisions that he will regret at a later date.
never be in a hurry
Because the situation is so bad, the business owner with bad credit may be tempted to go with the first lender they come across without knowing that there are options. With patience and a bit of searching online, one can easily find a lender with the right approach to helping people with bad credit.
Do not agree to pay the application fee or processing fees in advance
Just because one is in a bad position due to bad credit does not mean one should pay exorbitant processing fees and application charges when applying for small business loans with bad credit. Look online and it is possible to find a lender that will not charge such fees.
I do not agree to set up a new merchant account
If a business owner already has an existing account, there is no point in agreeing to the lender’s terms that the borrower must open a new merchant account. Lender must be willing to offer financing and work with existing card account. The creation of a new account implies the payment of fees and charges to the service provider, an additional charge that the borrower can do without.
Do not agree to install new card processing terminals
If a small business owner already has card processing terminals, there is no reason to agree to the lender’s terms of the borrower purchasing, leasing, or renting additional card processing terminals. If such terminals are required, the lender should be able to provide them at no additional cost to the loan process.
You do not agree to provide warranty
There is no reason for a borrower to agree to provide collateral when applying for bad credit small business loans. As it is, the borrower has to pay a higher interest rate than usual. One can find a lender capable of offering small business loans without asking for any personal guarantee or property mortgage or collateral.
Disagree with a high factor rate
Lenders can take advantage of situations and ask for a high factor rate of 1.5. What this means is that you pay 1.5 times the amount borrowed or a whopping 50% interest rate. One should select a lender that offers a rate of around 1.2 to 1.3, which is fair given the situation.
Making the right decision in selecting a loan provider is absolutely imperative for people with bad credit if they want to get out of their situation. A wrong decision could make things worse. Finding a lender who also provides advice and the loan is like finding a lifeline.
