Are you running what is known as a high-risk business? Or do you serve a high-risk industry? Either way, there are some problems you will run into – all to do with money, of course.
The truth is if you are a risk to credit card processing companies and lenders, it is a lot harder to access normal services. But there are a few solutions.
We’re going to explore those in a moment. But first of all, how can you tell if your industry or business is a risk?
What is a high-risk business?
There are an incredible amount of businesses seen as risky by lenders and merchant account providers. Anything that doesn’t need registration with a local regulatory body will be viewed as a risk.
As will the traditional industries such as tobacco, firearms, gambling and even health products. Alcohol, waste products and online software are also a risk, according to lenders. The reasons? These industries all have one thing in common – fraudsters and criminals love them.
The first problem you will encounter when setting up a high-risk business is finding a merchant account. However, there is a solution. There are plenty of high risk merchant accounts available these days for companies that might face problems.
They will give you more protection, and keep you in good standing. As long as you reduce the risks – with transaction limits, for example – the provider will cover the rest.
Finding a loan
Loans can be tricky to come by when you are a high risk business. It’s easy to see why. With the threat of criminal activity, it isn’t unusual for a company to go out of business after a serious security breach. And that leaves a lender with no way of getting their money back.
So, if you are struggling to get access to conventional business loans, try using a trade account. Trade lines are credits with your suppliers – you borrow their products and pay them back over time. It’s a great way to build up your credit and, eventually, you can apply for a bank loan once you are proven.
It is also vital to get the right insurance for your business. Again, because you are at more risk of fraud or criminal activity, it makes sense that you have to pay more. Your premiums will be based upon a variety of factors. You can expect to pay more depending on the industry you serve, for example.
You might have to pay more for errors and omissions, too. And, of course, if you don’t have the correct compliance, you will be liable for penalty fees – and potentially lawsuits.
The bigger picture
Finally, if you want to avoid any of these problems, be vigilant in everything you do as a business. If you don’t give criminals an opportunity, they won’t be able to damage your business.
Make sure your payments systems are watertight, and all staff understands the checks they need to make. It will help your business survive.