Are you a small business owner struggling with opening a business account or getting business funding such as a cash advance with bad credit? This article will tell you how your less than perfect credit score can affect the process and what immediate effect it’ll have on your ability to get easily approved for merchant services. This is true of both personal and business credit. So, let’s read below to see.
Getting a Business Account & Cash Advance
Let’s start with drawing a parallel between business credit and personal credit. The former has to do with your business’s financial history and is connected with your business’s EIN (Employer Identification) number. As for the latter, it has to do with your personal spending history and is connected with your social security number.
What lenders will want to know about your business? Let’s see:
- As a sole trader, you’ll be required to show your own personal credit history to lenders.
- As a startup owner, lenders will want to measure your creditworthiness.
- As a small business owner, you’ll be required to show your company’s financial history, including the loan agreements you’ve had, defaults, and credit card payments. This also refers to the current financial state of your business.
One thing is for sure, bad credit doesn’t mean there’s no light at the end of the tunnel. Thankfully, there’re respectable payment processors and lenders that specialize in the high risk field. They can help you avoid any disappointment when it comes to getting the necessary merchant services for your company.
So, no matter you need a business account bad credit or high risk business financing such as a cash advance, a true business funding specialist can help you enjoy the cheapest rates and the most secure services.
Bad Credit Impact on Your Business Account
Below you can find several effects bad credit can have on opening a business account:
- When opening a business account, banks will want to know the financial position of your business. This way, they can better determine how well the business can bear responsibility.
- Banks will want to see the credit history your business has already had. Low scores will mean your business is risky and the bank can lose its money.
- Poor credit or no credit will make it more challenging to get access to unsecured working capital for marketing, payroll, as well as for office supplies.
According to Tevis Verrett, president of the financial education company The Note Empire Opening, there’s no difference between opening a small business account and opening up a regular checking account. However, problems with your banking and credit can create challenges. It’s recommended to resolve them and only then apply for a new bank account.
To sum up, although bad credit negatively impacts your business when trying to open a new credit account, there’s still a way out. You just need to take the right steps to improve the situation. The same is also true of getting approved for funding for your business.
Author Bio: As the FAM account executive, Michael Hollis has funded millions by using cash advance solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.