Research the Reasons for the Rejection
Regardless of the lender that rejects you, the initial step is to find out the reason for rejection. The most plausible reason for not qualifying for a loan with regards to the standards of American Express is that the cash flow of your business is too weak to clear the debt. While most merchant cash advance providers have loose standards of loan application, American Express has stricter financing policies. Here are reasons why you could fail to qualify for an American Express Merchant Financing.
1. Industry Discrimination
A traditional merchant cash advance (MCA) is normally availed to any company that has regular credit card receipts, with rare exceptions. However, American Express Merchant Financing is only availed to particular business types. Most of the businesses that the lender finances are in the lodging, restaurant, and retail industries. But if you are not in these industries, you require showing exceptional capitalization and cash flow while surpassing the yearly credit card receipt requirements.
2. Late Payments
While the majority of MCA providers do not have a due date, American Express Merchant Financing requires you to meet a repayment schedule, or repay a particular amount within a specific period. If you get denied for American Express Financing, there is a likelihood that your cash flow cannot meet the repayment schedule of your requested amount.
When it comes to American Express Financing, you need to offer collateral that is not a motor vehicle or real estate. This leaves you with only one choice, which is a piece of costly company equipment. If your company lacks equipment with a value that matches the amount of the loan you want, forget about applying for this funding.
4. Credit Score
A majority of MCA providers will not put much weight on your credit score when you are looking for funding. They mostly base their decision on your future credit card receipts. But American Express Merchant Financing considers your credit score. If you have a bad credit score, you cannot get approved for a loan.
Look for Alternative Options
After rejection, you can decide to adjust business operations to improve the chances of qualifying for American Express Merchant Financing. Otherwise, you can look for other lenders with loan facilities similar to those of American Express Merchant Financing. Here are some alternative programs that resemble American Express Merchant Financing.
1. PayPal Working Capital
This loan is availed to subscribers of PayPal Business or PayPal Premier for three months or more. You are offered a lump sum that is repaid through a portion of daily sales that are credited in the PayPal account of the borrower. This portion depends on the amount borrowed, which depends on the PayPal sales history. The lender offers various daily repayment rates. The amount has to be cleared in 18 months, but there are no late fees, penalty fees, pre-payment fees, and periodic interest charges.
2. Square Capital
This lender offers Flex Loan to companies that use its point-of-sale product. The lump sum is cleared through a portion of daily credit or debit card sales. While you have 18 months repay the loan, you need to pay at least 1/18 of the loan every two months.
Other Factors to Consider
The benefit of the alternatives listed above is that you don’t need a great credit score or collateral. While all programs need you to have annual sales of over $100,000, PayPal does not. PayPal Business needs annual sales of over $15,000 while PayPal Premier needs annual sales of over $20,000. These lenders do not discriminate against any industry.
Share Capital’s Flex Loan and PayPal Working Capital have the lowest interest rates in the market due to their requirement that businesses pay a particular amount within a specific period. DelanceyStreet charges higher rates but lacks a restriction as to the amount to be paid per month.
As great as being funded by American Express Merchant Financing might sound, it is not the only fish in the sea. Find another lender and keep the business going.