A new business with poor credit can establish a merchant account by looking for other account providers that will consider their credit history, finding a cosigner, getting more capital, and applying for an online merchant account.
Having a merchant account allows the business to accept payments through credit or debit cards which will give convenience to both the merchant and the consumer.That is why even new businesses would like to try this new innovative solution for the business. But just like any other businesses, new businesses must face a lot of requirements for them to acquire or sustain a merchant account and one of them is the applicant's credit history.
The reason why providers will look into the applicant’s personal or business credit history is that it will tell them how well you or you or your business have handled past credits or debts. When they think that your personal or business credit is not good enough, they will simply have to deny your application. This is typically common to newly established businesses in which they only have little or poor credit.
But there are still some few things that any new business owner can do just to acquire a merchant account and here’s how:
Look for other merchant account providers
Some merchant account providers or credit card processor are just too strict with their requirements and the application. It may help if you just do more research on different merchant providers and see what their requirements are. You may find a provider that will consider and accept your application even if your credit is poor.
Find a cosigner
If you really can’t find a merchant account provider that will consider your application, you need to find a co-signer. A cosigner, also called as a guarantor, will be the one who will represent and will be responsible for any payment of credit or any loan of the business. A cosigner with a very good credit will be the one to apply for your merchant account. Find a close friend to cosign or another owner, if your business has multiple owners. The ‘original’ applicants must also fully understand and must meet their financial obligations since it will be a great risk to the co-signers credit and financial status and every unpaid loan or debt made by the real business owner will reflect on the cosigner’s credit history.
Get some capital
Lend some money from some bank in your area. This will boost your financial credit. There are many local banks that may lend you a fair amount of money just as long as you could present to them a good business plan, and excellent sales and business history.
Apply for an online merchant account
This is most applicable to online web stores. Online merchant account providers initially have low or zero setup fees and are not strict with their requirements. You can try them while still starting on your business. It will make you save more and will gradually make your credit history better. By then, it will be easy for you to acquire a real merchant account.