Question & Answer

People with a less-than-stellar credit history find getting a traditional small business loan from a bank. At Principis Capital, we work with business owners to help get them funding they need, even when they’ve previously been rejected. Here are some common questions we receive:

Will my credit be a problem?

No, as long as you are not currently in bankruptcy.  Principis works with business owners with all types of credit profiles.  We tailor our programs to fit the merchant.  More than half of Principis’ clients have credit scores of under 600 due to a variety of factors.

What if I have a house in foreclosure?

No problem — you will still be able to obtain funds from Principis!

Does the merchant advance show up on my credit report?

No.  Principis does not report to the credit bureaus, and therefore the advance will not show up anywhere in your personal credit.

What if I have a civil judgment on my credit report?

A civil judgment usually does not present problems for obtaining a merchant advance from Principis.  Depending on the situation, we may ask you to provide details and status of the judgment.

If I don’t have a FICO score, can I still get an advance?

Typically, we require that the business owner have a FICO score.  If there are multiple owners, and one does not have a FICO, we will still go ahead with the merchant advance.

What if I have delinquent tradelines on my credit report?

No problem.  We know that small business owners have a lot going on in their lives, and sometimes payments are missed or delayed. We look at the overall picture, and in virtually all cases we can still provide a merchant advance to your business.

Do I have to provide tax returns?

Generally not. We may request the tax return on certain situations, but that is rare.

What if I am behind on payments to my suppliers?

Principis looks at the overall health of your business. If you are behind on certain payments, you will be able to use the funds we provide to catch up.

Is it ok if I have overdrafting in the business bank account?

Yes, small to moderate amounts of overdrafting will not affect your chances of obtaining a merchant advance from us.

Do you require a minimum balance in the business bank account?

No. Principis does not require a minimum balance in your bank account.

How will tax liens affect my approval?

Usually, tax liens will not affect your approval as long as you show proof that you have put in a payment plan to take care of them.

What if I already have a bank loan?

No problem.  Many of our merchants have long-term bank loans, and need our funds only to address short-term liquidity needs.

Find Out MoreDownload ApplicationApply Online

Owning your own business means having the freedom and responsibility to make your choices about its future, not to mention not having to answer to any bosses. We’re happy to work with businesses owners, even those with bad credit. Just make sure you meet these criteria:

Do I have to own my business to get a merchant cash advance?

Yes. Principis is careful to ensure that employees who are not owners cannot sell your business’ credit card receipts without the knowledge and approval of the business owner(s).

If I have partners, do they all have to apply with me for the merchant advance?

If you have partners in your business, at least 51% of the ownership shares of the business must be represented by those individuals who are applying for the merchant advance.  Sometimes, one partner has the majority of ownership.  In those cases, only that person needs to apply.  In other cases, ownership is spread across several people or legal entities.  In each case Principis will verify that a majority of the owners is aware of and approves of the decision to obtain a merchant advance for the company.

I own the property where my business is located, does that work in my favor?

Yes, we always like to see that a business owner has made a significant investment in his business. Approximately 20% of our clients do own their business property.

Can the business be operated out of my home?

No. You can read more about that here.

Find Out MoreDownload ApplicationApply Online

Many merchants have faced rejection from banks when they apply for small business loans. Having a poor credit score, low processing, or working in certain “high risk” industries can turn banks away. But at Principis Capital, we look towards a business’ future instead of its past and have made it our mission to provide funding for businesses passed over by traditional lending institutions. Here are some common questions we get asked:

Do you work with new business?

Yes, we work with businesses that have been in business for at least 8 months.

What if my business is a startup?

So long as your startup has been in business for at least 8 months and accepts credit cards, we will be able to work with you.

Do you work with C Corporations or S Corporations?

Absolutely. If your business is set up as a corporation, remember to apply to Principis together with other shareholders representing at least 51% of the shares, or to provide a corporate document indicating who is empowered by the shareholders to make financing decisions.

Do you work with franchises

Yes, we work with franchises. You can read more here.

I didn’t start my company, I’ve only recently purchased it. Will you still work with me?

Of course! A merchant cash advance from Principis Capital is a great way to recapitalize your business.

I run my business out of my home. Is that a problem?

Unfortunately, yes. Principis requires that you have a separate brick-and-mortar location associated with your business, whether that is a retail store, a manufacturing location, an office, a warehouse or another facility.

What if I only sell over the internet?

No problem — we recognize that many businesses these days use the Internet as a key sales channel. If you do all of your sales over the Internet, we still require that you have a brick-and-mortar location associated with your business.

Do I have to accept credit/debit cards?

Yes. A merchant cash advance from Principis Capital isn’t a loan, it’s a purchase of your future credit card transactions. Read more about how it works here.

Find Out MoreDownload ApplicationApply Online

In some instances, it is simpler to do business as a sole proprietorship than as an LLC, particularly if you are the sole member of the LLC. Still, you will have to be careful when making the change, and take care of your documentation to ensure that it doesn’t affect your taxes or other filings.

What’s an LLC?

An LLC, or Limited Liability Company, helps personally shield you from the company’s liabilities. LLC’s can also choose a number of different ways to be taxed (as an S or C corporation, partnership, etc) which gives you greater flexibility. However, many states levy additional taxes on these types of businesses, so be sure to check with your state government to see which one is right for you.

What’s a Sole Proprietorship?

A sole proprietorship is the simplest form of ownership and the most common among merchants. Under this system, you are the only owner of your business – and you’re not sharing ownership with any partners. Entrepreneurs who start their own businesses without outside help usually don’t have people to help them, and while it lets you follow your own vision it also makes you personally liable for the success of the business.

What Happens if I Want to Change From an LLC to a Sole Proprietorship?

If you have a merchant cash advance from Principis Capital, you can still change your business entity without any sort of penalty. You just have to take these steps:

1. As with any business change, you should obtain the services of an accountant to document the transfer of assets and liabilities.
2. Change your merchant processing account and bank account(s) into your name, or open new accounts in your name and close the LLC’s accounts.
3. Close (dissolve) the LLC when the transfer has taken place.
4. Notify us in advance of any the changeover so we can ensure your account stays in good standing.

For more information about Sole Proprietorship, check out the this great SBA post.

Find Out MoreDownload ApplicationApply Online

One common occurrence for small businesses in their growth phase is the need to change the the type of legal entity it’s registered as. So why would a business owner choose to do that? Let’s break it down:

What’s a Sole Proprietorship?

A sole proprietorship is the simplest form of ownership and the most common among merchants. Under this system, you are the only owner of your business – and you’re not sharing ownership with any partners. Entrepreneurs who start their own businesses without outside help usually don’t have people to help them, and while it lets you follow your own vision it also makes you personally liable for the success of the business.

What’s an LLC

An LLC, or Limited Liability Company, helps personally shield you from the company’s liabilities. LLC’s can also choose a number of different ways to be taxed (as an S or C corporation, partnership, etc) which gives you greater flexibility. However, many states levy additional taxes on these types of businesses, so be sure to check with your state government to see which one is right for you.

What Happens if I Want to Change From a Sole Proprietorship to an LLC?

If you have a merchant cash advance from Principis Capital, you can still change your business entity without any sort of penalty. You just have to take these steps:

1. Register a new LLC in your home state.
2. Work with an accountant – preferably one who is familiar with small businesses – to ensure that ownership of the LLC is clearly documented, along with corporate procedures (if you have one or more partners). Also ensure that initial contributions, including assets and liabilities of your sole proprietorship, are transferred from you to the LLC and documented appropriately.
3. Transfer your merchant processing account and bank account(s) into the name of the LLC. If you’re worried that this is going to take too long, you may want to open a new merchant processing account and new bank account for the LLC, and close down the old accounts.
4. Notify us in advance of any the changeover so we can ensure your account stays in good standing.

For more information on setting up an LLC, read these great tips.

Find Out MoreDownload ApplicationApply Online