If you need a loan to start your own business, then having a good credit score makes things a whole lot easier. Having a high credit score gives you plenty of borrowing options. However, if you have a bad score, it is not necessarily the end of the road as you still have alternative methods of financing. Though, qualifying for a bank loan is likely out of the question. If you are an entrepreneur who has a low credit score, then don’t give up just yet. Here are some creative avenues that are worth looking into as a means of funding your business.
Look Into Microloans
Research what is called “microlenders” to see if this is something you can work with for your business. There is a vast array to choose from and so it is important that you do your homework before choosing one by comparing their rates. Microlenders are web-based lenders that are willing to loan you out money ranging from $5,000 to $30,000. Although it never will be an enormous sum, it could be just enough to get you on your feet. It is a good idea to check out some online communities and forums, as you’ll find people who are in a similar situation as you who can give you advice on the best microlenders available.
Getting accepted for a grant is about the best thing that can happen. It is essentially free money. That being said, getting one is easier said than done. You need to do plenty of legwork and even hours of research to be successful in the process. However, if you do snag a grant, the time spent trying to get one will be well worth your while. Keep in mind that you may have heard of a range of services, both on and off the Internet that will help businesses locate grants for a sizable fee. However, it is best that you avoid these, as they are more often than not a scam. Instead, look for those grant programs that are business-specific. For instance, if you are hoping to open a restaurant, then do research on grant programs that specialize in this niche. Additionally, some grant programs are specific to particular demographics such as single mothers, veterans, and minority business owners.
Look Into Crowdfunding
You can also look into crowdfunding as another option. However, keep in mind that this option also takes a lot of work and is not a sure thing. Nonetheless, similar to grants, the ability to crowdfund your business is an outstanding success if you can pull it off. You can use such services as Indiegogo and Kickstarter to design your campaign and pitch your business ideas to those who may be willing to fund you. The best thing about crowdfunding your business is that it can aid you in reaching out to potential investors. Average, everyday people who are interested in investing some of their money into a good idea look into these campaigns, as well major investors that are willing to put a considerable amount of money behind people. If you want to find success in crowdfunding than keep in mind that a lot of money and effort will have to be put into campaigning initially.
Ask Family and Friends
Your family and friends will be more likely to invest in your business than banks because they know you better, and can decide whether or not your worthy of investing in based on who you are and your trustworthiness and so are much more likely to be willing to overlook any bad credit woes that you have. Additionally, if there is a personal reason as to why your credit is so poor, then friends and family will be more understanding of that. If those that are closest to you believe in your business idea and that you have the gumption to make it successful, then there is a good chance that they would also be willing to fund it. Additionally, if you are up for having a business partner, why not look at your family members first. Creating a family business can be the ideal solution to your credit predicament.