Starting a business can be a risky venture and there are no guarantees that things will go smoothly. Unfortunately, having a business fail or struggle to take off can have a big impact on your credit score, making it difficult to start again.
Trying to get help from a bank or a more traditional financial lending body when you have bad credit can be an impossible task. Thankfully, there are some options still available to you, such as a bad credit merchant account.
Bad credit merchant accounts benefit those whose business is struggling or those doing business in a high-risk industry. Some high-risk industries include gambling, travel, payday loans, and resale shops selling electronics.
To reflect the risk involved, these accounts come with a higher monthly payment and transaction fees. You should expect to pay high transaction fees, especially with international transactions which can reach 10% depending on the account and industry.
Your account will also require a much higher initial reserve. This protects the lender from the risk of fraud and excessive chargebacks. Bad credit merchant accounts also have higher monthly or yearly fees, usually around $50 or more per month.
There are also quite a few benefits that come with a bad credit merchant account, targeted at helping your business thrive. For instance, you can count on a longer settlement period, usually extended to a full week compared to the typical three days.
To apply for a bad credit merchant account, most providers will ask you to supply at least a few of the following items:
Based on this information, the lender can provide you with an accurate estimation and credit offer. There are comparison services online that can help you navigate through different bad credit merchant account providers and find which provider is best for you.
However, there are a few things you should consider before choosing which bad credit merchant account provider to choose.
The best providers will be transparent and clear about their structure and business practices. You should feel confident about who you are partnering up with so always ask the important questions.
Florence Carpenter is passionate about ensuring that the process of opening merchant accounts is as straightforward as possible. She graduated from the University of Michigan with a bachelor’s degree in Marketing.
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