US business is booming thanks to bullish consumers that have been empowered by low unemployment rates.
Given that reality, all that stands between you and the business of your dreams is a little creativity and a can-do attitude… Oh, and funding.
If you’re big on ideas and positivity but low on cash, don’t fret. While getting the money you need to launch a business can be difficult, especially with bad credit, it’s certainly not impossible.
Below, our team outlines a handful of simple steps that you can take in order to get the funding you need to start a business with bad credit.
1. Apply for Local Grants
First-time business owners tend to have access to a number of grants that are put out by private organizations and local governments. These grants are usually meant to stimulate the local economy or to help underserved populations become entrepreneurs.
Finding grants that you may qualify for is as easy as going into your local city hall to inquire about opportunities. If asking doesn’t turn anything up, take to the internet to see what’s out there.
Grants are a lot more valuable when it comes to starting a business with bad credit because you don’t have to pay them back!
2. Check out Micro-Lending
Micro-lending platforms like Upstart or Kiva source funds from a number of people in order to service loans. This unique lending model spreads the risk of lending across multiple parties which makes it a lot easier to get loans approved.
Micro-lending platforms that are built with turning a profit in mind will usually need you to show at least average credit and high income in order to facilitate your loan. Platforms like Kiva that are built solely to help people are a lot more flexible with loans and do not charge interest.
3. Reach out to Family and Friends
Mixing business and family can be a dicey proposition but if you’re willing to take the risk, asking your personal network for help can net you substantial rewards.
Family members tend to lend without any expectations of interest and their guidelines around when they’d like to be paid back can also be more flexible.
If you burn a family member or friend by not returning borrowed money however, you could lose them forever. So, proceed with this option to start a business with bad credit with caution.
4. Bring on a Partner
Bringing on a business partner when launching a new venture can be helpful for a variety of reasons.
A partner means having somebody to bounce ideas off of. It means being able to draw on someone else’s experience. It also means having access to an additional wallet.
With a business partner by your side, splitting start-up costs out of pocket may be feasible. If it’s not, then maybe your partner’s credit is strong enough to help you secure funding.
5. Seek out No Credit Check Financing
Not every loan requires a credit check to go through. Some loans will look at other aspects of your financial life in order to determine the risk of lending to you.
Bonsai Finance and other online lenders have made names for themselves by facilitating credible, no credit check financing. With a little diligence, we’re sure that you’ll be able to find a solid lender that’s willing to work with you.
6. Try out a Secured Loan
If you’re really struggling to get a lender to trust you, you could add some skin in the game by putting up collateral to back your loan.
Types of collateral accepted by lenders vary, but they typically include vehicle titles, stocks, and other valuables.
The downside of secured loans is that if your business loses the money it’s lent, your lender will take possession of your collateral. For that reason, you’ll want to be careful to never offer up something that you can’t afford to lose.
7. Take a Beat to Build Your Credit
No matter how many workarounds you pursue to start a business with bad credit, things will always be easier if your credit is in good shape.
So then, maybe it’s worth it to hit pause on your business venture to start building your credit back up.
Doing simple things like paying off your debt, keeping up with payments going forward and letting your credit history mature can all have profound effects on your credit score which will then get you better terms on future loan products.
8. Start Saving
Loans cost money. In a perfect world, you could forgo them altogether and fund your business venture out of your savings.
Depending on how grandiose your business vision is, self-funding your ideas may be impossible. If the price tag on your venture is attainable though, consider putting a little bit of money away each month and funding your company’s start with all cash once you’ve hit your savings goals.
Building up a savings account takes a lot of patience but undoubtedly that patience will pay off when you don’t have to deal with bank fees or interest.
Wrapping Up How to Start a Business with Bad Credit
Money shouldn’t stand between you and your business ambitions. Armed with any one of our start a business with bad credit tips, we think that you’ll be able to find the funding you need to bring your ambitions into reality!
For more insight on how best to manage your business, consider checking out more of our expertly crafted content on Business Fundas today!