Don’t Let Bad Credit Stop You from Getting a Startup Loan
Regardless of how good your business idea is and how solid of a business plan you have, in order to make the execution work, you need to provide your business with adequate funding. Unfortunately, if you have a bad credit rating, this might become somewhat more difficult.
On the other hand, having bad credit shouldn’t stop you from pursuing your dreams and there are more than several methods that should help you overcome this difficulty with great success. With that in mind and without further ado, here are five methods that you can get startup funds even with a bad credit score.
Start by fixing your credit
This may take some time but it’s definitely worth your while. Most commonly the credit score is estimated on a FICO scale that goes between 300 to 850 (the higher the score, the better).
The first thing you need to do is to start paying your bills on time. Second, you need to pay off as many debts as you currently have and ensure that you use your credit cards as smart as possible.
Finally, don’t close unused credit cards, due to the fact that the length of your credit history plays a significant role when it comes to your credit score.
Keep in mind, that your ability to get a loan isn’t the only thing affected by your credit score, which is why you need to improve the score, regardless if you’ll use it to fund your startup.
Ask friends and family members for money
About 38 percent of all startups are funded by friends and families of entrepreneurs in question. However, this method has some downsides, as well. First of all, the people in question may not have this kind of money, to begin with.
Second, just because you haven’t gone to a bank for money, it doesn’t mean that you should look at this like anything other than a loan. Sure, you may not have an interest rate but if you fail to return money altogether, you risk losing a personal relationship, which is something much more valuable.
All in all, rushing into this kind of financial obligation is not something that you should do lightly.
Secured loans
Your credit history really won’t matter if you can provide security of another kind. The first method is to have a collateral to offer, while the latter is to have a co-signer.
Secured loans are the cheapest usually.
The problem with this particular method lies in the fact that you may not have the collateral needed.
This brings us to the issue of finding a co-signer. Sometimes, this also means entering a partnership, however, there are some instances in which you’ll, once again, need a friend or a family member to help you out.
Keep in mind, however, that this means exposing them to a great amount of risk, which is not something that a lot of people will be comfortable with.
Online Lenders
There are a lot of online lenders who are willing to work even with those who don’t have a sterling reputation. Finding the right provider of no security business loans, however, is all but simple.
What you’re looking for are the facility terms (usually up to 24 months) with top-up and early payout options available. Also, keep in mind that some lenders are exclusive to the business person that you have in mind.
Here, you need to either inquire about your own business plans or find a lender that’s willing to work with entrepreneurs belonging to any industry. Either of the two is known to work.
Crowdfunding
In the end, there’s always an option for you to start an online crowdfunding campaign for your business. Here, however, presentation means as much as having a business plan (if not even more).
You see, there’s this one guy who managed to raise more than $55,000 to make a potato salad, while there are so many great business ideas that have failed just because their presentation wasn’t that great.
Moreover, there are so many ideas out there that are simply preposterous, which is why a lot of people have a hard time recognizing a truly amazing idea.
Keep in mind, however, that even after you resolve this issue, this isn’t the end of your troubles. After all, this probably isn’t the last business loan that you’ll ever need, which is why you need to make attempts to make this entire procedure a lot easier in the future.
Most importantly, we’re talking about the issue of improving your credit score and finding the most reliable platforms for project funding.
