How Can You Launch A New Business When You Have Bad Credit?
Credit is a crucial component to starting a business – for most people. You might be dreading that visit to the bank if your credit score is less than desirable. But, there are a variety of ways to finance your venture outside of traditional financing options.
Don’t let your credit score prevent you from launching a new business. Take a look at these alternative financing options to find a solution that works for you.
Microloans
Banks aren’t the only lenders you should be considering. There are many different microloan providers on the market who can lend you a helping hand.
Microloans are essentially small loans that are often available to entrepreneurs and small businesses. If your business requires a relatively low amount of start-up capital, this might be an appropriate option.
These loans are often valued at $5,000 to $25,000, and many servicers lend to people with poor credit.
If you have a better credit score, you can probably expect to receive a more favorable interest rate. But, this is a solid option for entrepreneurs who can’t obtain sufficient funding with a credit card or standard bank loan.
Many microloan sites also report your repayment information to credit bureaus, so you can also improve your credit this way.
Crowdfunding
Crowdfunding is another alternative approach to business financing, which has nothing to do with your credit or financial standing.
Online platforms allow you to solicit money from the site’s users. You can create a profile that explains the purpose of the money you’re asking for.
For most of these sites, you can even share your campaign on other social media platforms.
Your success with this method depends on your ability to network and market your potential business. The more people you reach, the higher your chances are to reach your goal.
You typically set a specific dollar amount as a milestone, which is tracked with a progress meter that your followers can see. Your loved ones, and even strangers, can then see how close you are to reaching your target amount.
Crowdfunding is also nondiscriminatory, so it can be used to pay for any aspect of your business. In some cases, people also use crowdfunding to finance medical procedures and home renovation projects.
If you don’t mind making your monetary goals a bit more public, this can be a great option.
Auto Title Loans
If you own a car, you might already be sitting on a source of income.
Auto title loans are based on the value of your car, and not simply your credit score. If you own a vehicle that is in good condition with decent resale value, you might be able to borrow a few hundred to a few thousand dollars.
To obtain this type of loan, you just need to fill out an application and send in the required documents such as proof of income and vehicle ownership. If your claim is accepted, a loan officer will contact you to walk you through the process.
The best part is that you can still keep and use your car, even after you’ve received your loan.
After that, you just need to pay back the loan according to the terms you agree upon with your chosen creditor.
It might seem impossible to finance your company if you don’t have a sparkling credit report. However, if you’re willing to look past credit card and bank loans, you don’t need to let your credit score inhibit your plans for success. Try one of these financing methods to launch your new business.
