Getting a San Diego small business loan is never a simple proposition, especially since the dramatic economic downturn of 2009-2010. And while the small business lending situation has improved some since that time, challenges remain, especially for companies with less than perfect credit scores in San Diego.
One possibility for securing funds that many San Diego small business owners fail to consider is using their portable luxury assets to secure a collateral loan. At Diamond Estate Jewelry Buyers, we have assisted hundreds of San Diego business owners with short-term cash loans from $2,500 to $250,000. These confidential secured loans allow you to tap the value of your fine jewelry or vintage Swiss watch for any purpose your business might have, regardless of your San Diego credit rating.
There are other options for San Diego small business owners with below average credit ratings to secure needed funding. Most of these options will not be from traditional San Diego lenders, and the increased risk of these loans is often reflected in higher interest rates, hidden fees & penalties, and potential harassment from collection agencies. In the following article, we will review some of these possible funding options for small businesses in San Diego, CA.
San Diego Business Credit Cards for Businesses with Bad Credit
Business credit cards can provide San Diego small business owners with poor credit histories access to debt financing. But again, the risk associated with lending to a San Diego business with bad credit will be reflected in higher interest rates. As you search for a credit card, beware of amazing offers, like no introductory APR (Annual Percentage Interest Rate). Be sure to read the fine print. You are likely to find hidden fees and terms that could find you drowning in high interest rates and penalties.
As a San Diego small business with poor credit, you probably won’t find a card with anything lower than 15% APR. Try looking for a business credit card through your local San Diego credit union. These are usually not-for-profit entities, and they are more likely to accept an application from a San Diego small business with a less than stellar credit rating. In addition, federal credit unions are not allowed to charge interest rates in excess of 18%, even if you miss a payment.
San Diego Revenue-Based Loans for Businesses with Bad Credit
If your San Diego small business has a proven track record of regular bank deposits, a revenue-based loan could be an option, even if you have a poor credit rating. These San Diego business loans are based on the deposits going into the business bank account on a monthly basis. Usually, a San Diego small business can obtain a loan equal to 10% of its annual gross deposits. Loan terms can be as long as 18 months, and rates are generally higher than a traditional San Diego bank loan. Repayment is made in small increments on a daily basis via electronic transfer of funds.
San Diego Merchant Cash Advance for Businesses with Bad Credit
A San Diego merchant cash advance can provide your business with a lump sum of cash in exchange for a portion of future credit card sales. For San Diego small businesses with a steady income from credit card receipts but bad personal credit, a merchant cash advance may be a viable option for securing a business loan in San Diego.
The majority of San Diego merchant cash providers claim a fixed percentage of your daily credit card receipts, and will often approve funding in as little as 48 hours. But be sure to shop around. The rates these companies charge can vary greatly, from as little as 12% to as much as 38% of your credit card receipts in San Diego.
Friends & Family Loans for San Diego Businesses with Bad Credit
At some point, more than 50% of all San Diego small business owners turn to family and friends for some kind of financing. Chances are that your friends and family want you and your San Diego business to succeed, and they will be willing to arrange a loan to you, even with your poor credit rating. Be sure to consider whom you ask, and how you ask, carefully.
Make sure you have a solid San Diego business plan in place and that you can present your situation professionally. And remember that your family and friends may have assets that they have overlooked, like a piece of fine jewelry or valuable timepiece that could be used to secure a collateral loan to help your San Diego small business.
Another way a friend or family member can help your San Diego business is by becoming a credit partner. If your family members have good credit ratings, they may be able to help your San Diego small business obtain lines of credit in the form of business credit cards. While this method does carry some risk to the cosigner, some business credit cards will not appear on the credit reports of the cosigner unless the San Diego business goes into default. Make sure to research the particular details of these types of cards before you go to your potential credit partner for assistance.
San Diego Micro Loans for Small Businesses with Bad Credit
There are many web-based lenders that offer micro-loans to San Diego small businesses with less than perfect credit. These small San Diego loans, typically from $5,000 to $25,000, are offered in a variety of forms, varying in both how they spread the risk to their lenders and how the loans are priced. The interest rates on these San Diego small business loans will tend to be high for borrowers with bad credit, with some companies charging more than 20% interest.
You should also check within San Diego County for state-subsidized micro lenders and non-profit lenders such as ACCION. In addition, don’t forget about the Small Business Administration’s micro loan program, which also lends funds through non-profit community based lenders in San Diego, CA. These types of micro loans often feature lenient credit requirements, making them ideal for San Diego small business owners with poor credit.
San Diego Home Equity Loans for Business with Bad Credit
Another way to secure a loan for a San Diego business with poor credit is to borrow against your home equity (the difference between what your home is worth and how much you still owe on the mortgage). In these types of loans, your San Diego home is used as collateral, and the more equity you have in your home, the more favorable the terms of the loan will tend to be.
You should be well aware of the risks associated with using a home equity loan to fund your San Diego small business. If your San Diego business should experience a downturn, your personal property could be subject to forfeiture, making this option especially risky.
To avoid such risks, including an even worse credit score and being harassed by unscrupulous collection agencies, contact Diamond Estate Jewelry Buyers for a free collateral loan consultation. Their short-term secured loans for your fine jewelry and precious metal collateral could be the perfect financing option to meet the cash needs of your San Diego small business.
To learn more, visit them online at: DiamondEstate.com.
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