These days, consumers hear a lot about credit scores and debt-to-income ratios. They know that bad credit can affect the type of loans creditors will lend and the rates at which they will lend them. The same holds true for retailers. Poor credit determines whether a business owner can get retail industry financing at a good interest rate or at all.

Most financial services companies – banks, credit unions and community lenders – will only work with retailers that have a high credit rating. For those touched by a volatile market, this can make a tough situation worse. There are options for these retailers, however. There are a number of lending products that may help business owners alleviate their financial situation.

Check Out Asset-Based Financing

If a retailer is comfortable putting up real estate as collateral, they may be able to get an asset-based financing. Lenders who offer this financial product will expect the retailer to put up commercial or investment real estate as collateral. In some instances, they will also accept personal real estate. Some retailers can manage this risk, others cannot. Think long about the risk associated with this type of loan.

A Commercial Real Estate Collateral Loan Could Help

If a retailer owns commercial real estate with considerable equity in the property, the retailer could leverage that equity with a real estate collateral loan. Similar to a home equity loan, the commercial property owner could refinance the property, turn that equity to capital and do what he can to maintain the business.

Try an Alternative Business Loan

If a retailer’s credit score is too low to obtain a standard loan from a bank, the retailer could opt for a short-term business loan. The retailer who chooses this option should expect some terms to come along with it. Typically, the lender will ask for some kind of collateral to protect his its risk. They may also require the retailer to make a profit for two years in a row.

Take a Chance on a Cash Advance

A retail cash advance is a decent option for disciplined retailers who need capital and are working hard to reestablish credit. With this funding mechanism, a lender, after determining your most likely revenue over the course of two to three years. They then lend a percentage of that project income to the retailer. The retailer pays the loan back through ACH withdrawals from its bank to the lender.

Dealing with bad credit is a challenge for any business. With a little research, however, there are alternatives to retail industry financing that will keep a business running strong.

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