Can You Get A Merchant Cash Advance With Bad Credit?

Can You Get A Merchant Cash Advance With Bad Credit?

Can You Get A Merchant Cash Advance With Bad Credit?

Merchant cash advances have gained popularity as a financing option for businesses looking for quick access to capital. However, one common concern among entrepreneurs with less-than-ideal credit is whether they can qualify for a merchant cash advance. In this post, we will explore the possibility of obtaining a merchant cash advance with bad credit and provide insights on how businesses can navigate this situation.

Understanding the Role of Credit in Merchant Cash Advances

While creditworthiness plays a significant role in traditional financing options, merchant cash advances focus more on a business’s sales performance and future revenue potential. Unlike loans, merchant cash advances are based on a percentage of future sales, making credit scores less of a determining factor. Lenders assess the overall health of your business and its ability to generate consistent revenue.

Alternative Assessment Criteria

Merchant cash advance providers often employ alternative criteria to evaluate businesses with bad credit. They consider factors such as monthly sales volume, cash flow, and the length of time the business has been operating. These factors help lenders gauge the repayment capacity and assess the risk associated with providing the advance.

Sales Performance as a Key Factor

Lenders primarily focus on the sales performance of your business when evaluating a merchant cash advance application. They analyze your monthly revenue and average daily sales to determine the advance amount you qualify for. If your business demonstrates strong sales performance, even with bad credit, you may still have a chance of obtaining a merchant cash advance.

Providing Documentation of Sales

To strengthen your application, it’s crucial to provide accurate documentation of your business’s sales performance. This includes financial statements, bank statements, and sales records. These documents give lenders a clear picture of your revenue trends and help build confidence in your ability to repay the advance.

Working with Specialized Lenders

Certain merchant cash advance providers specialize in working with businesses that have bad credit. These lenders understand the challenges faced by entrepreneurs with credit issues and are more lenient in their evaluation process. Research and identify lenders that specifically cater to businesses with bad credit to increase your chances of approval.

Exploring Collateral Options

In some cases, offering collateral can improve your chances of obtaining a merchant cash advance, even with bad credit. Collateral provides security to the lender and reduces their risk. Assets such as equipment, inventory, or accounts receivable can be used as collateral. Discuss with the lender if they consider collateral and the specific requirements for using it to secure the advance.

Seeking a Co-Signer or Partner

Having a co-signer or business partner with good credit can significantly enhance your chances of securing a merchant cash advance. Their positive credit history and financial stability can mitigate the lender’s concerns regarding your bad credit. However, it’s essential to carefully consider the implications and responsibilities involved before entering into such an arrangement.

Building a Strong Business Case

When applying for a merchant cash advance with bad credit, it’s crucial to present a strong business case. Highlight the unique selling points of your business, demonstrate your market potential, and provide a comprehensive plan on how the advance will be utilized to generate additional revenue. A solid business case can offset the impact of bad credit and instill confidence in the lender.

Working on Credit Improvement

While bad credit may not disqualify you from obtaining a merchant cash advance, it’s still essential to work toward credit improvement. Take steps to address outstanding debts, make timely payments, and manage your finances responsibly. Improving your credit score over time can open up more financing options and help you secure better terms in the future.

Obtaining a merchant cash advance with bad credit is possible, albeit with certain considerations. While traditional credit scores play a limited role, lenders focus on your business’s sales performance and alternative assessment criteria when evaluating your eligibility for a merchant cash advance. By providing documentation of your sales, working with specialized lenders, exploring collateral options, seeking a co-signer or partner, and building a strong business case, you can increase your chances of obtaining a merchant cash advance, even with bad credit. However, it’s important to remember that improving your credit over time should still be a priority to access more financing options and secure better terms in the future. With careful research and preparation, businesses with bad credit can still find suitable merchant cash advance options to meet their immediate funding needs.


Mark J. Kane is a successful entrepreneur spending the last 16 years lending money to business owners. Beginning his career as a psychologist, at the age of 23 he became the youngest Hospital Admin running a 100+ bed facility. He built two businesses to over 500 employees and a business from scratch to over $18M in revenue in 18 months before selling. This experience led him to begin Sunwise Capital.

Category: Advice, Getting Money

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