Funding Options

Whether you like it or not, your credit score is your financing’s SAT score. High score pretty much gets you good credit offers. Bad score, on the other hand, will hinder you from getting various funding sources. Although there are bad credit loans that you can turn to in case an emergency, you do not want to depend on it forever.

If you wish to start a business, but you currently have a low score, the trick is to get funding that gets your score back on the positive. Here are some tips to do that.

Find alternative financing other than bank loans or credit cards

According to some studies, 75% of the money that you need to start a business can come from other financial sources and only 25% for early-stage entrepreneurs come from bank financing. While you can opt for bad credit loans, this option usually has higher interest rate given that having bad credit makes you a sub-prime borrower.

Seek help from family and friends

Do you know that more than 50% of business owners get their financing help from family members or friends? The best thing about this option is that these people in your life want you to succeed. They do not check your credit score just to lend you money.

You may also choose to use the financial help you get from family and friends to rebuild your credit score. Instead of getting bad credit loans, why not borrow money where you won’t get charged as much?

Be proactive in investigating web-based lending companies

If you look online, you will see many bad credit loans offers to entrepreneurs with poor credit score. Typically, you can borrow from $5,000 to $25,000. These websites typically report your payment to credit bureaus. With timely payments, your credit score will surely get back on track.

However, be cautious with these bad credit loans offers. Just because they have a website doesn’t mean they are a legitimate company. At the same time, shop for microlenders that offer more flexible terms. With the convenience of finding your options online, you should be able to get one that is best for you.

Take advantage of gifts and grants

This “free money” is one way of avoiding bad credit loans if you wish to get around the high interest rate. The disadvantage it, there is no silver bullet in this option. Despite what they say about how easy it is to get gifts and grants, the reality is you will need to look long and hard to get it.

Like online lending companies, you should also be cautious about services that are too good to be true. There are fraudulent companies that offer gifts and grants, but you have to pay for processing fees you can get one.

Be creative with your options

Free money can come from old employers, family and friends, or business associates. Brainstorm a list of people you can approach before you think about getting bad credit loans. You may find better options within your circle.