High Risk Business Loans
2017 Guide to High Risk Business Loans with High Risk Business Lenders
“The biggest risk is not taking any risk… In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” Mark Zuckerberg
Can we same the same thing about high risk business loans? Let’s explore.
The first thing we need to understand is how risk is defined and perceived. Naturally, high risk business lenders will see a company differently than the business owner. Do we agree? That’s called perception.
Both sides of the coin want to manage the risk. On the one hand, you have the business owners who need to handle the cost of funds. He needs access to working capital to continue operations.
On the other side of the ledger, the lenders must manage defaults. Whether it’s a bank or an alternative lender, the objective is the same. Banks and alternative lenders lend money to make money. It’s all about risk and reward.
After all, no lender wants to give the money away.
It may be beneficial to drill down a little bit to get a handle on the various risk factors and what they mean to you.
What Your Mother Can’t Tell You About High Risk Small Business Loans
Sometimes these are separate conditions, and sometimes they overlap. Either way, they impact your ability as a business owner to get financing for your company.
It affects your ability to get a small business loan or merchant account.
Bad credit suggests high risk financially. This risk also means a higher premium. High risk business loans bad credit just means you’ll get a loan with a shorter term and with higher interest rates.
The same goes if your industry is considered high risk.
No matter what it’s too expensive. Do we all agree?
Now you’re starting to understand both sides of the high risk business loan.
Trust me this is just scraping the surface of all the risks. Then there are the additional financial risks.
Industry and Business Examples of High Risk.
According to Small Biz Trends the top 8 industries to fail by risk are:
- mining (51.3 percent)
- manufacturing (48.4 percent)
- services (47.6 percent)
- wholesaling and agriculture (47.4 percent)
- retailing (41.1 percent)
- finance, insurance, and real estate (39.6 percent)
- transportation, communications, and utilities (39.4 percent)
- construction (36.4 percent)
Would you lend any money to someone who is likely to fail in the next five years? If you as the lender does decide to take the chance, why would you go any longer than five years?
You wouldn’t, would you? You’d probably keep it very short term like six months or so if at all.
The Truth About High Risk Business Loans and High Risk Business Lenders
Do you have poor credit or bad credit? Do you have what is known as a “thin” credit file? If so, you are considered a high risk and will only be eligible for a high risk loan.
If your company has poor credit or bad credit or it has what is known as a “thin” credit file your business is a high risk and will only be eligible for a high risk loan.
The truth is no bank will lend you money. Period the end!
It is unlikely that you will be able to receive a business credit card with low to no interest starter rates.
The same goes if your company rates as a high risk business. No traditional lender will offer you money. Even if you post assets or collateral, the banks will turn away your business.
Don’t believe me? Do me a favor and go to your local bank. Ask them if they will provide funding of any sort to your business if you have poor personal credit or are in a high risk industry.
I’ll wait right here because I know the answer and know you’ll be back shortly.
OK. You’re back.
Business Loans for Bad Credit and Business Loans for High Risk Industries
Remember we’re going to tell you the truth, right? First, these loans are expensive. The interest rate will be much higher.
You’re not going to get a 5.49% loan with monthly payments for five years. Nor are you getting an SBA loan for 6.25% for ten years.
A high risk lender is also called an alternative lender. Alternative lenders (non-bank lenders) are financial service firms that specialize in originating loans to companies that have greater risks. The risk is either credit or industry.
Not all high risk lenders or alternative lenders are the same. Much like banks, they have limits to the amount of risk they will take on any given loan. Some alternative lenders exclude certain industries.
As an example, you will find very few if any who will finance medical marijuana.
Risk, as we explained previously, can be minimized by charging a higher rate with shorter terms. The SBA will offer up to 10 years on their best loans. Not so when approved by a high risk lender.
Loan terms can range from three to six months to perhaps 9 or 12 months if you’re extraordinarily lucky.
Most of your online lenders like Sunwise Capital will consider higher risk loans. Another way to reduce the risk is to lessen the amount of capital made available to your company.
One consideration is a microloan. A microloan is usually any amount between $5,000 to $25,000.
Now you might be offended by the offer, but you need to consider the benefits.
First, you’re establishing a relationship with a lender who believes in you and your business even if it’s not great rates, terms, and dollar amounts.
Second, they are going to report the loan to the business credit bureaus.
The benefit of this is that it can help you in the long run.
By making proper, timely payments. When you need additional funds, a company like Sunwise Capital can offer you more money with better rates and terms.
Why? You’re establishing a track record, that’s why.
Always remember that you must ask yourself these three questions.
1. How much money do I need?
2. What will the money do for me?
3. What happens if I don’t get the money?
As previously stated, most of our more successful business owners do not look at the rate or interest paid as an expense. They look at it as an investment. Does that make sense?
Look at securing a high risk business loan as an opportunity to grow.
There are four basic loan types available to those with bad credit or riskier industry types. When you have high risk either by credit or industry, you can expect to pay a factor rate.
Alternative lenders make these loans available to those who have bad or poor credit. FICO scores above 550 and with exceptions those who score 5000 or better.
These are usually unsecured business loans, requiring no assets or collateral. These are fixed payment loans. You can expect to repay these loans daily.
Many clients who initially object to the daily payment find it to be beneficial. The reason it is advantageous is that it allows for better cash flow and money management.
Ultimately, they all agree that they do not miss the payment. Besides, no one likes writing large checks at the end of the month, do they?
Bankruptcies discharged at least six months ago are OK. Judgments and liens are OK within certain limits. Sometimes they require a payment plan.
The approval is usually within 24 hours and funding within a day or two.
The way factoring works, in general, is that you will sell future revenue at a discount. If you need $100,000, it may require you to sell anywhere from $18,000 to perhaps as much as a $48,000 premium.
Before you say, “NO WAY!” let’s look at this more closely.
Do we all agree that running a business is hard work?
Here is why getting funding from Sunwise Capital is not hard at all.
We make financing available to thousands of well-run businesses. How do we do it?
- We use our offer performance-based model that provides financing to companies that are unable to go to a traditional bank for capital.
- What we do differently is that we analyze your cash flow. We use over 200 indicators that look at the health of your business more than your personal credit.
- This creates an opportunity to offer capital to companies that get turned down by the banks.
- Our out of the box thinking and evaluation process makes it easier for Sunwise Capital to provide you loans at fair rates.
The truth is that most business owners and entrepreneurs of SMB’s are not familiar with creative financing options. The bottom line is that they do not know what options are available when traditional institutional lenders turn down their loan requests.
These banks make it challenging to get working capital and money to grow or expand their business.
- Sunwise Capital offers business loans including to high risk borrowers based on credit or industry.
- There are no broker fees or set up fees that other lenders charge.
- We provide fast access to your funds that is critical for business owners.
- Personal credit scores must be 500+
- Sunwise Capital offers unsecured loans. That means no assets or collateral.
- No reporting of the funding to the Experian, Trans Union and Equifax on the personal side.
- The loans do report to the business credit bureaus.
- Loans Up To $5,000,000.00!
- Most high risk loans are from 3 to 6 months to 18 months.
- Most businesses can borrow 2 – 3 times a year.
- There are no spending restrictions!
It’s what every business owner needs
The application process is simple. It’s less than one page.
Your business cash flow is one of our important indicators of the health of your business. Do you have extra money in your business account every day?
Decisions in as fast as one business day, funding in as fast as one business days.
If your company gets an additional $10K to $250,000 (even up to $5M), what would it do with the money? Better yet how much more will you make with that funding? What happens if you don’t get the money?
Expansion & Renovation Cash Flow Working Capital
Invest in Newer Technology Insurance
Hire Additional Staffing
Bulk Supply Purchase
Expansion & Renovation
How do You Fund Your Dreams?
If the bank says “NO,” what do you do?
As a Top Alternative Lender, Sunwise Capital provides:
Fast and easy business loans in as little as two days with minimal paperwork and no traditional personal guarantee programs.
Top Notch Personal Service
- Sunwise Capital is different. We pride ourselves on our transparency.
- Sunwise Capital lets you talk with underwriting directly. No messing around with 23-year-old salespeople just trying to earn a commission.
- Sunwise Capital will discuss with you all your business and financing options.
- We are on your team. Our idea is to sit next to you at your desk, not across from you.
- Our mission is clear. We want business owners to get predictable access to funding.
- Sunwise Capital stands ready to provide business owners of industries with the best financial solutions in the industry.
Sunwise Capital Wants to Know if You Have You Been Turned Down Because of Bad Personal Credit or Your Risky Business Type?
Is your cash flow getting squeezed?
Do you need a lender that get you the best business loan solution for you and your business?
The advantage of working with Sunwise Capital is clear. We look beyond typical bank products, loans, and credit lines to find the right solution for each customer’s requirement.
- A newer company?
- A startup?
- Do you have challenges with your personal credit
- Are you losing money?
- Do you lack collateral or assets?
Did you answer yes to one or more of these questions? If you did it does not mean you cannot qualify for one of our loan programs.
Get Fast and Easy Business Loans – Even Loans for People with Bad Credit
Many of our clients ask us how we do it?
How do we simplify the lending process so any business can get fast and easy business loans?
How are we able to offer business loans for bad credit without jeopardizing long-term success?
Are you looking for loans for small businesses with bad credit that are unsecured and with no traditional personal guarantees?
Imagine obtaining no collateral loans. Business funding while insulating your FICO score.
Maximum Loan Approved Amount
The maximum loan amount is a percentage of your monthly/annual business sales/revenue. Loan Amount is equal to approximately 10% of your monthly sales volume (including cash, checks or credit cards) and can increase with better rates and terms as the relationship grows and develops.
How it works
We are loaning you money today based on future revenue.
We are buying future receivables.
- This type of funding dates back to the Egyptians – nothing new.
- The “interest rate” is called a factor rate. Ex. For every $1.00 borrowed you repay $1.18 to $1.50. (more on this later).
- The loan is repaid daily Monday – Friday (no weekends).
- It’s automatically ACH’d from your bank account.
- There are 22 business days to the month.
Let’s look at an example
EXAMPLE – the math is simple
Business borrows $10,000.
Loans are between 6 months to 18 months (this is the part we won’t know until you submit your paperwork and we pre-qualify you).
For every $10,000 you borrow, you will pay $2,000 – $4,000.
In this example, we’ll split the difference – $3,000
We will look at both a 6-month loan & an 18-month loan.
There are 22 business days in the months.
6 months = 6 X 22 = 132 days; 18 months = 18 X 22 = 396 days
$10,000 X 1.30 = $13,000
13,000/132 = $98.48 M-F (6 months)
$13,000/396 = $32.82 M-F (18 months)
Payback happens daily Monday – Friday (no weekends).
Fixed payments. 22 Business days in a month
Interest/fee is a write-off. The funding is a loan.
$100,000 – Payback Example
Factor Rate Loan Amount Total 6 Months (132) 18 Months (396)
1.20% $100K $100,00 $120,000 $909 $303
1.30% $100K $100,000 $130,000 $984 $328
1.40% $100K $100,000 $140,000 $1,060 $353
Examples of Who Qualifies? We fund over 700 Industries.
Retailers Bars & Restaurant Auto Repair Mechanic Tire Sales
Doctors Dentists Plumbers Electricians HVAC
Internet Businesses Home Based Businesses
Most business types will qualify, if they:
- In Business one-year (12 months)
- $200K in annual revenue
- FICO 500+
- No open BK
- Liens no more than $175K (with written agreement)
- At least 12 months remaining on their lease.
Who does not qualify?
- Business Owners with open bankruptcies
- Not paying current bills (personal-business)
- Sub 500 FICO
- Too many NSF’s
- Behind on rent/lease/mortgage
- Less than six months in business
Merchant Cash Advances
These are not loans. Your credit card sales determine the approval. Not your personal credit. These are cash advances but sometimes referred to as MCA loans. You are selling your future receivables at a discount.
The advantage is you can receive your funds quickly. Repayment is through your merchant account. A percentage of you nightly batch orders is reserved or held back by the lender.
The advantages are a variable payment that allows for better cash flow management. Days that generate more revenue will result is a slightly higher amount. Naturally, slower days with less credit card sales or revenue mean smaller payments.
You’ll have a rough idea of how long it will take to repay the cash advance based on your prior sales or merchant history. Sunwise Capital does not require you to switch merchant accounts.
Comparison of Merchant Cash Advance vs. Capital Business Loan
- MCA is on credit card sales ONLY vs. TOTAL revenue
- Holdback percentage fixed at 10% to 30% VS. NO Holdback
- Variable rates vs. Fixed rates
- ACH’d every day vs. M – F (no weekends)
- Erratic cash flow vs. dependable cash flow
This option is known as accounts receivable funding or financing. The beauty of account receivable loans is your credit is not the determining factor.
Accounts receivable loans are a type of asset based financing. This funding option is an opportunity to leverage your receivables for a cash loan. You are using the money owed by your customers to get the cash advanced to you.
Account receivable companies provide the factoring. Sunwise Capital can provide you with this alternative funding option.
A factoring company gives you a reduced amount of the unpaid invoice or receivables. The big advantage here is your ability to free up your working capital.
Rather than have your invoices languish for 30 or 60 or more you can receive the cash up front.
Invoice Factoring Rates
What determines how much you receive for your invoices or receivables?
Credit rating of Company paying the receivable
Size of company paying receivables (larger is better)
Age of receivable (the newer, the easier to collect)
The major perceived drawback or negative to this type of financing is that you relinquish collection of funds to the factoring company. What this means to you is that you can now focus on your core strengths.
Many business owners feel that this process makes them look weak financially. This belief is truly a matter of perception. There are some industries, like the garment industry that cannot survive without this type of financing.
Suddenly you get a huge order. The challenge is you can’t fill it.
Lack of capital.
Purchase Order Financing is a solution to bridge the gap between your cash flow or available working capital.
Let’s face it. If your business turns down orders, the word gets out quickly to everyone. The net result is a hit on your reputation.
What’s the solution?
When you opt for purchase order financing, you allow the lender to pay your supplier for you to fulfill the job. You are receiving a cash advance against the collateral of the finished product.
You may not receive 100% but typically covers a significant percentage. Then the purchase order finance company takes their fee from the collected invoices.
Like the accounts receivable company, the purchase order financing company is responsible for the collection process.
A secondary possibility is that the purchase order financing company sets up a line of credit with your supplier. That LOC is set up in their name, and they provide the financial backing.
This funding option is a perfect solution for those that have poor credit or are considered a high risk.
Other options are available to you.
Using assets can be a viable solution. What can you use?
- Auto titles and
- Other types of property
Just note that if you default you risk losing this property or collateral.
In today’s digital age this is becoming an attractive option. There are web portals that arrange for this type of lending. As the business owner, you can look for a “peer” to invest in your business.
Look at your local banks or the traditional lenders when you have an individual who will use their excellent credit to guarantee the loan.
Clearly, this is someone who trusts you and believes in your business. Signing means they are prepared to take the risk as guarantor of the loan.
Sometimes credit unions are willing to consider high risk business loans. These loans apply to those that have damaged credit.
Perhaps you can find a credit union that serves your particular industry. Your industry and its alliance to the credit union might give you a leg up on getting the financing.
Sunwise Capital offers fast and easy short-term business loans even if the bank says you or your company is high-risk.
The combined experience of our executive team is close to 100 years working with businesses like yours across the nation.
We believe a long-term relationship with you is beneficial to both of us, and we are ready to invest in your business today.
FREQUENTLY ASKED QUESTIONS
What does Sunwise Capital provide?
The money every business owner needs to secure their business. (Access to working capital when they need it!)
The vast majority of all qualified business owners who apply
How much money can I get?
Sunwise Capital Loans ranges from $10,000 – $5,000,000.
Do I have to secure my Sunwise Capital loan with any assets or collateral?
No, our loans are unsecured. If you have a proven business track record, this helps us determine the amount of your loan
What is the cost of funds?
These high risk business loans are provided based on a factor rate. The fee is considered interest and is fully written off or tax deductible.
How do I get my money?
Funds ACH’d into your bank account.
Are there fees to have funds released?
How quickly for funds to be released to my bank account?
1-5 business days to deposit into your bank account.
Are the Sunwise Capital high risk small business loans reported to any personal credit bureaus?
How can Sunwise Capital help my business?
Sunwise Capital high risk loans provide you with access to funds when you need it.
Will the Sunwise Capital cash loan appear on my credit report?
No, the loan will not appear on your credit report. It will have no impact on your debt to income ratios or your ability to apply for financing.
We do however report to business credit bureau’s helping to build your business credit.
Can I pay early?
Can I qualify for a discount if I pay early?
Yes, and No, we do offer a discount for paying earlier than scheduled on some of our loans. Ask your underwriter.
How do I pay the money back?
Automatic bank ACH. Payments for high risk loans are usually daily although you may qualify for weekly.
Can I get more money if I need it?
Yes, Sunwise Capital provides you with additional funds, typically you can borrow 2 – 3 times per year.
Our objective is to create a long-term relationship. As you start to repay, we will consider providing you more money. This additional capital will be with lower rates and longer terms.
Are there any restrictions on the funds?
We believe you know your business best. Therefore, there are no restrictions as long as it’s for business purposes.
Is there a cost or obligation if you approve my loan?
No cost, no obligation. If we approve you for more than you need, you’re not obligated to take the full amount.
Once you pay approximately 50% of the loan, we will make more capital available.
How long does it take to get approved?
Will I need to guarantee my Sunwise Capital Loan personally?
There is no traditional personal guarantee required on high risk loans.
How do I apply for Loan?
Just complete the application and required paperwork or call 888-456-9223.
Is there any paperwork involved in the approval process?
There is a short application plus three months’ bank statements
Do you require any personal collateral?
No. Your business history and bank statements help us determine the amount of your business loan.
Are there any monthly premiums or broker fees?
I have had some problems on my credit report in the past. What’s the impact?
Sunwise Capital approves most high risk loans primarily on the health of your business and other factors. Your personal credit plays a role; however, it is not the key determinant like a bank.
What if I had a bankruptcy?
Bankruptcy is not an issue if the BK discharge is six months or more.
How does this compare to a Merchant Cash Advance?
The MCA is based only on your credit card sales.
SUNWISE SUCCESSES WITH HIGH RISK INDUSTRY TYPES AND BAD CREDIT INDIVIDUALS
Manufacturing Company. Providing electronic components. International business, the owner needed a small business loan for inventory to deliver globally promptly.
His business and personal credit was slightly dinged but had significant revenue. Because he was a newer business and bad credit the bank was not an option. Approved for $225,000.
Beach Retailer. High inventory turnover. Selling low-priced clothing. Multi-store locations. The company’s primary distributor reduced the credit availability significantly to fulfill inventory demands. Needed business loan for inventory for high season. The bank said too risky. Approved for $35,800.
Remodeling Center. Needed access to working capital to fulfill upcoming projects for a major builder. They had several small liens and unable to get bank financing. Approved for $91,163.
Franchise owner. This individual went through bankruptcy. This BK damaged his personal credit. Looking for a business loan. Approved $100,000.
Bankruptcy? No Problem.
When I first applied, I was a little nervous since I had only a few years of business experience. I had a discharged bankruptcy after an expensive divorce case.
If you have bad personal credit but it is still very possible to get a loan. Unfortunately, I was a little desperate for the startup money and was able to get funded by Sunwise Capital. I was definitely surprised but happy that I eventually obtained financing for my company.”
Harold B. Malley
Money for My Business
“I was thinking about getting a small business loan for my company a while back and applied with Sunwise Capital. I found out during the very fast process that I could leverage my good personal credit and obtain business financing faster than not using my personal credit. By doing this, I could get enough money to build my local franchise company. Even though I’m in business for just over a year – 13 months to be exact. Thanks for your professionalism, I couldn’t have done it without you.”
Adam S. Thomas
Salt Lake City, UT
“I had applied to several banks before meeting with Sunwise Capital and was turned down by all of them. I was able to obtain $100,000 loan…all CASH into my account!”
Las Vegas, NV
$50,000 Business Loan
“Because I had an existing business but poor personal credit I was able to get funded. Pretty fast and easy. So far, I have obtained a $50,000 loan and am already looking forward to borrowing again. Thanks for all the help.”
$10,000 With Bad Credit
“My personal credit is terrible. I kept getting turned downed at multiple banks, because of my personal credit. I applied with Sunwise Capital. So far I have made some excellent progress and have obtained a $10,000 loan. Thanks guys, I appreciate it.”
Brett B. Russell
$2,000,000 Working Capital Loan
“My business is nine years old now and am excited about what just happened on Tuesday. I was approved for a 2-million-dollar loan that is going to be vital to my manufacturing company as we continue to grow. I had an outstanding line of credit with Wells Fargo. They would not give me more.”