The past two years has been devastating for retailers and it makes getting bad credit small business loans difficult. Many owners are grappling with bad credit caused by the economic downturn. This downturn left many business owners delaying bills, pulling money from their savings and other tactics to keep their business afloat until things improved. When you are a small business, the best loan type to get is an SBA loan. In today’s highly restricted credit market, many small businesses will not be approved for this loan.

Before retailers had the choice to apply for new, more cost effective option, their primary method to deal with bad credit was to get an advance from the credit card processing company. These may seem like loans but are in fact unregulated cash advances that come with hefty interest rates. These advances have interest tacked on at rates higher than 50%, they usually have costly upfront fees, crippling daily payment amounts, and will come with a requirement to switch card companies and/or purchase equipment.

In this credit restricted environment the proliferation of cash advances has increased. Many times, these cash advances will crush the business that participated under financial burden. These businesses would see a large part of their net income go to these companies to pay for interest and high holdback or payment rates.

There are currently much more cost-effective bad credit small business loans. These loans are a new type and are formally called creditcard receivable financing, are characterized by:

Rates at least half that of a merchant cash advance or lower.No fees upfront.No pressure or requirement to switch card processorsNo requirement to buyany forms of equipment.This is areal business loan and will build positive credit, unlike a Merchant Cash Advance.Even if you have a credit score as low as 550 you can get a max loan of $500,000.Approved within 48 hours of applying, get funded in 7 – 10 days, and available in every one of the 50 United States

Some bad credit small business loans are much more cost effective than others. Today’s economy is tough and small businesses need to know how to get the capital that they need without being taken advantage of by companies looking to make a quick, unfair profit at the long-term expense of the business.