Small Business Lending for High Risk Industries
Although you are operating a very successful business, have ever wondered why your business loan request is always declined? Lending institutions may view your business as high risk or restricted industry. A business is considered a high risk based on 2 accounts; the risk of financial failure exists and it is undoubtedly high, and it operates within a high risk industry. Either one or both conditions might apply. The first condition addresses your business' viability (sustainable profit), while the second condition addresses safety and health concerns. However, the two conditions might affect the ability of your business to acquire loan. Some of the high risk industries include:
Agriculture and forest products
Travel agencies; recreational vehicle or boat sales
Software related services.
Convenience stores (commonly known as C-stores).
Entertainment (adult entertainment is considered restricted)
Healthcare; specifically assisted living facilities, nursing homes, and continuing care retirement centers
Limousine services as well as hotels or motels
Jewelry, precious metals and stones; wholesale and retail
Long distance or over-the-road trucking
Real estate agents/brokers
Taxi cabs (such as the purchase of cab medallions)
Bad Credit Makes You a High Risk Borrower
Your credit score can also make your company a high risk business. Lenders especially the more stringent financial institutions such as banks will look at your credit scores before giving out loan. Although at times it is prudent to push off creditors in order to keep your business running, creditors will classify your company as a risk business if you default loan repayment.
What is the way out?
If you are operating a small business in high risk field, you can apply for high risk small business loan. Most business choose to apply for high risk loans because they have exhausted other options, such as factoring their accounts receivable or applying for bank loans. In most cases, it is easier and more appropriate to apply for high risk loan than to pursue any other option.
The best part with high risk loan is that you will receive funds immediately. High risk loans can be very beneficial when you are trapped for cash and you need money for your business to run effectively. The other benefits of high risk loan are there is no long term commitment to the lender. Generally, the term ranges between 3 to 18 months. You can use the loan to provide relief to short term business problems.
If you are in a high risk industry, you can always get loans from high risk small business loan.