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How to Get Small Business Funding With Bad Credit

Triumph Business Capital

November 1, 2018

We’ve discussed in recent posts how invoice factoring works: it’s a type of accounts receivable financing solution that converts outstanding invoices due within 90 days into immediate cash for your small business. And while many business owners assume that they need good credit to qualify for funding for their business, invoice factoring services can provide a unique and simple cash flow solution, even if you don’t have perfect credit. Here’s what you need to know about business funding with bad credit, or a not-so-great credit history.

Have Bad Credit?

It can be incredibly tough for business owners with bad credit — or lack of credit — to gain traction, especially as they’re trying to get their businesses off the ground. Keep in mind that small businesses (defined as businesses with fewer than 500 employees) account for almost all business in the United States. Invoice factoring, for many types of small businesses, can help ensure adequate funding while they continue to grow their businesses.

Can Invoice Factoring Services Help Build Credit?

In short, yes. The Wall Street Journal reports that, “The factor advances most of the invoice amount — usually 70% to 90% — after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance.”

To be clear, building credit and establishing a higher score certainly takes time, but invoice factoring services can help build your credit. For example, by partnering with an invoice factoring company, you can pay down existing debts with the immediate cash flow, and you can also pay vendors and other expenses on time.

Plus, many invoice funding companies offer additional financial services, such as free credit checks, free background checks, online reporting with 24-hour access, invoice management and collections and more. Together, these comprehensive solutions can help you get small business funding with bad credit. 

As a business owner, you need to be proactive in improving your credit score. Working with an invoice factoring company can prevent you from falling behind by giving you immediate cash for work you’ve completed. That means on-time payments, which can, over time, lead to better credit.

Understanding how to establish credit for your business is the key to maximizing potential and growth. For more information about business factoring companies, contact Triumph Business Capital.