Do you need business funding for your company with bad credit? Be aware if you have a high score, a wide variety of funding sources will be open to you to enjoy. In case, you have a bad credit or no history, you will have hard times to get approved for a business loan.
Ideas for Entrepreneurs with Low Scores
Poor credit is something you cannot run away from. The important thing is to be able to find the necessary funds for your business and use them wisely enough so to get your score back on track. Below you can find some helpful tips to improve your credit score and start growing.
- Credit Cards and Bank Loans are Not the Only Source of Financing
According to the studies in the field, credit card and bank financing make up some 25% of the total funding needs of starters. 75% of the necessary funds can come from some other sources that do not take your credit rating that much seriously.
- Microlenders and Web-based Lenders
You can find many nonbank lenders offering microloans to entrepreneurs via the Internet. Loans may vary from $5.000 to $25.000 range. You can get the best for your business needs with a reputable high risk payment processor like firstamericanmerchant.com (FAM). Poor credit is not a problem for First American Merchant, so you can easily get approved for a bad credit business loan and start improving your score.
- Gifts and Grants
Consider focusing on gifts and grants. Search for programs available for your type of business. Businesses related to the healthcare industry, technology, and retail with low-income areas qualify for grants. The so-called “free” money can be obtained from free services from friends or business associates, gifts from relatives, and free office space from former employers. Be creative and reduce your startup expenses.
- Family, Friends, and Relatives
Over 50% of all business owners ask for some financing help from their friends and relatives. Friends and relatives may not take your bad credit score too seriously as they trust you. Also, they may be sure your business is going to succeed.
According to CircleLending’s Business Private Loan Index, the average rate on business loans from friends and relatives is currently at 7.6% percent. The rate counted for more than 12% at Accion, and was over 20% at Prosper for those with bad credit.