A merchant advance is imperative to initiate or expand a business. However, getting appropriate funding solutions with a bad credit score is seemingly an impossible task. Many businessmen often fail to infuse in extra capital at the time of immediate need as they inhabit a poor credit score.
However, everything is possible in war and business. As a smart businessman, you need to master a few tricks to get hold of a merchant advance. Before you take a direct plunge into the tips, first have a better understanding of the importance of having a good credit score.
Importance of Credit Score
A good credit score acts a determining factor to get approval or rejection of a loan application. Generally, the lenders assess your credit score in order to know your creditworthiness. Merchant loan being an unsecured loan doesn’t entail any collateral. So, the lenders also use credit score to judge the applicants’ repayment capability.
As this loan doesn’t come with the risk of property seizure, it is essential for the lenders to judge a borrower’s financial health. Hence, smart people always pay heed to their credit score in order to avail a loan without any hurdle.
Nevertheless, it’s never too late for being smart. So, go through these tips mentioned below to obtain a merchant advance with a bad credit.
- Have a Sturdy Business Plan
In order to secure a loan with a poor credit rating, you must provide the lender a robust business plan. This would help to create a sense of credibility in the lender’s mind. Evaluating your business idea and its potential growth, it may happen the lending company gives the final nod with a green signal. So, work on your business module because a comprehensive roadmap projects positive cash flow.
- Meet the Eligibility Criteria
Increase your chance of procuring the loan by meeting all the necessary eligibility criteria. Every financial company has its own distinctive qualifying characteristics. Being a responsible applicant, you must thoroughly read the criteria. Settle for the one which you seem to align with sufficing all the basic requirements.
- Furnish Proper Documents
Once you decide on a lender, the next step deals with arranging the necessary paperwork. You should keep the documents handy in order to avoid the end-hour crisis. Moreover, ask the lender what are the required documents for you to get approved by them. Generally, the following documents are relevant:
- Business certificate proof
- Profit and loss statement
- Business tax returns
- Debt schedule
- Bank statements
- Look for a Co-signer
Giving an advance with a bad credit is definitely a risky proposition from the lender’s point of view. Hence, to build trust, you can look for a co-signer. Ask your business partner or a family member who will be willing to sign the deal.
- Offer Collateral
Lastly, you can also offer collateral to the financial company to increase your chance of getting approval. Definitive collateral will act a secured equipment to ease of the wary of the lender.
On an ending note
It is significant to have a sound credit score. If you are running low on rating, little steps forward can ameliorate the score to avail merchant advance in future with zero difficulty. However, till then consider these hacks as the last resort.