6 ways to start a business with bad credit
How would you react if someone told you that starting a business was too risky? Alternatively, maybe you have heard that credit score is a major factor in determining whether you get approval for a loan. If you do not have perfect credit, then you might think it is impossible to start a business. The good news is that you can find a bad credit loan online at SFgate.com and start your business with it.
You might be surprised to hear that bad credit does not necessarily mean you will not qualify for a loan. In fact, some lenders even offer loans to those with poor credit scores. Moreover, having good credit is not the only thing that matters. There are ways to start a business without perfect credit. Here are six ways to get started.
1. Get an Unsecured Loan
If you are looking for a way to start your own business, but cannot afford to put down a large amount of money up front, consider getting an unsecured loan instead. An unsecured loan is one where there is no collateral required from the borrower. Instead, the lender takes on all of the risk and has the right to take back the loan at any time.
Despite your bad credit score, it may be wise to shop around for loan offers. There may be someone willing to give you a loan even with your bad record. However, the interest rates may be too high to cover the associated risks.
2. Purchase Order Financing
Another option is to purchase order financing. This type of financing allows you to buy goods before selling them. You will need to make sure you have enough cash available to cover the cost of the product plus interest. Once you secure the product, you turn around and sell it to your customers.
Grants are another great way to start a business without putting down a lot of money up front. Most grants require you to apply for them, so you will need to spend some time researching how to do this.
Here, you only need to sell your business idea to donors who can resonate with you and offer financial support. Instead of going for a loan that may be difficult to pay, grants can help you get funding without having to pay anything back.
4. Equipment Lenders
Equipment lenders provide funds to help businesses purchase equipment. They may require collateral such as inventory or accounts receivable. Instead of buying business equipment from borrowed money, you can get them through a supplier.
This means you get more bang for your buck because you do not have to pay upfront. That way, you can use the available cash for other things and grow your business without spending much.
5. Social lending sites
Social lending sites allow you to borrow money by using social media platforms like Facebook and Twitter. These sites typically charge a fee, which varies depending on the site. Therefore, you can expect to pay anywhere between $10 and $100 per month to borrow money. However, you will stand a good chance of raising enough cash for your startup business.
6. Micro-Credit Organizations
Micro-credit organizations give small amounts of money to people who want to start their own business. This happens through microloans, which are short-term loans. In most cases, these organizations understand startup business challenges and work with entrepreneurs to ensure they succeed. The downside is that you will not be able to build a long-term relationship with the organization.
There is a solution to every problem when starting a business. Finding capital is always the biggest concern. This is especially if you have bad credit and cannot access funds. However, these options should get you a solution.
If you have bad credit, it does not mean you should stop trying to start your own business. Just be smart about it. Try to find ways to reduce your costs and increase your revenue.
Remember, the key to starting a successful business is to have a plan. A well thought out plan will help you avoid unnecessary mistakes and keep you focused on what needs to happen next. Therefore, money should not be the reason why you decide not to start your own business!