When you’re already struggling to keep your business afloat and you have bad credit to begin with, it is a good idea to seek out business funding as a way to save your business.
But at this point your financing options will be limited, and you might not qualify for a large line of credit or loan to solve all your cash flow problems.
If this describes your situation, what can you do? Here are some ideas.
Use Business Funding to Improve Your Credit
First, one of your main goals at this point should actually be to improve your credit so that you can get a better deal on financing – one that might actually make a bigger difference in your cash flow.
If you can get any financing at all – even if it’s just a business credit card – take it. It might not be enough to turn your financial situation around completely. But just take it and focus on making your monthly payments on time. Use this financing option as a way to improve your creditworthiness overall.
Apply for SBA Microloans
The U.S. Small Business Administration (SBA) offers small business owners microloans up to $50,000 – most of which end up being about $13,000. You cannot use these funds to pay existing debts or real estate, but just about all other operating expenses are fair game.
Leverage Purchase Orders to Pay Suppliers
If your business has unpaid purchase orders from customers, then you might be able to pay suppliers by using purchase order funding. If approved, the lender will pay your suppliers up front so that you can fulfill your orders, collect payments directly from your customers and then send you the remainder (minus their fee) after you deliver the order to your customers. In some cases, suppliers might be paid in full up front.
Use Invoices for Collateral
Invoice factoring is a similar concept to PO financing above. If you have already performed work or delivered product to customers but are awaiting payment – typically on 30- or 60-day terms – you could still get cash during that lag time through factoring. The lender will pay you a portion of the invoice amounts up front (minus their fees), and then they will collect directly from your customers.
If your small business is struggling with cash flow and you need business funding, don’t assume that having bad credit automatically disqualifies you from receiving help. Contact Progressive Capital Funding today to see what options might be available for your company.