Bad Credit Business Financing

This is just what it sounds like—you will provide all of your business financing yourself, whether you use credit cards, personal loans, savings, or sell personal items to raise cash.

Friends and Family

This source of business funding is usually used up before startup, but if there are still any friends or family willing to loan or invest, this might be a viable business financing option.

Inventory

If your business has an inventory of parts or finished goods, you may be able to return excess parts to suppliers, for credit against invoices, for a restocking charge. You may be able to sell off any excess finished goods inventory. Even pennies on the dollar may be enough to get your business through the crisis.

Sale and Leaseback

If you have real estate or equity in equipment, you may be able to sell the same and then lease back only what you absolutely need.

Customers

Sometimes a long-term customer will place a large order and provide a deposit, or pay in advance. This source of bad credit business financing should not be overlooked.

For those suppliers that you have shared your turnaround plan with, you may be able to make some special arrangements, or use equity in your business for payment of outstanding invoices. However, this can be an expensive business financing method since the supplier is taking a big risk and will want a premium for their participation.

Employees

Postponing certain payments to employee benefit plans can provide temporary money for short-term use. This should not be done without first sharing everything about your business and the crisis with your employees, and getting their support. I am sure you are aware that employee tax deposits must NEVER be used for business funding. Tax deposits are trust money and should never be touched for any other purpose.

Insurance

You probably have already cashed in any life insurance policies you had, or at least borrowed against them. But, you should also check to see if you have any pre-paid casualty insurance premiums where you can rewrite a casualty policy and convert pre-payments to cash. Re-bidding your casualty insurance can also sometimes provide some cash outlay savings.

Financial Institutions

Although usually a dubious source of bad credit business financing when you re in crisis, you should always have an in-depth discussion with your banker to see if payments can be deferred, loans restructured, or anything else you and your banker might think up. This usually is a good thing to do after you have your crisis under control and the hemorrhaging stopped. A banker will not be of much help when you are bleeding money daily.

Caution: Do not lose site of the fact that you want to balance your cash flow (cash in equals cash out) as quickly as possible. Too much cash infused into your crisis early in the game always gives a sense of false accomplishment. The goal is to minimize all cash requirements, and then raise just enough business financing to get by until you have turned your business around and it becomes self-funding.

There you have a few of the more common forms of bad credit business financing. Now you need to get busy preparing your Turnaround Plan. This is a major step required in the turnaround of your business. You can access the Turnaround Plan report here.