Tommy,
Most regular forms of financing won’t look at you until you have been in business at least 2 years, and your income to debt ratio must be more than 1.2 (meaning that your income is at least 120% of your total debt)
There are several other ways to build credit but all they do is prolong the timespan till you open your next business. These forms would be Secured Credit Card, or a small personal line of credit. But without collateral loans tend to be expensive.
I guess it depends on what you want to achieve. I have terrible credit. If there was a debtors prison, I would be in it. Cost of being in the restaurant business
What I have found is there are accounts receivable businesses out there who will loan you money based upon you average monthly credit card volume. These are high risk loans, and will carry a high risk percentage.
But, again it depends on what you want to achieve. These loans usually require full payment in 40 to 52 weeks. I would only recommend this kind of loan if you are adding a store. Then the loan amount can be paid off by the credit cards receipts from two stores. Don’t use these guys to pay off current debts, or owed taxes. The percentage rate for loans like these may be upwards of 50%, most times you can get a lower rate, and penalty % from you other debtors. ***Problem is they might ask you to change your credit card proccesor which might cost you additional monies, plus the rates there proccessor charges you may be worse than what you previously rec’d
There are also groups like Advance Restaurant Finance, that look at your receivable. I.E. Bank Deposits, and CC Machine Receipts, to determine your gross receipts, and then they loan you 4 to 8% of your total annual receipts. They will take a pre-determined amount out of your checking account every week, and the loan period is usually 28 to 52 weeks. Upside ~ you don’t have to change your proccessor, they can load a credit card so the loan never hits your books per se.
