If you have a bad credit score then you might find it difficult to get approved for a loan for your business. Lenders often base their decision on the personal credit score and even if they do approve you, the interest rate charged will be high enough to send you into financial turmoil.
Even though a good credit score makes it easier to obtain loans there are certain start up loans for small business with bad credit that open up new horizons for new companies. These lenders do not only look at the financial aspect of the business but also take the value addition, vision of the company and other factors into consideration. Therefore, it is completely possible for a company with a bad business credit to receive funding.
Even though there are start up loans for small business with bad credit it is recommended that a company works on improving their credit score to be able to qualify for a loan on much better terms. That being said listed below are several options you can try out.
Turn to Your Friends and Family
There is a much bigger chance of being funded by people you know and it is much better than applying for start up loans for small business with bad credit. Most startups are funded by relatives or acquaintances because they believe in your vision and have already established a relationship based on trust. Borrowing from people you know also makes the loan more cost-effective however if you default on payments, there could be unpleasant social consequences.
A business owner can apply for a personal loan to help finance their new business. These start up loans for small business with bad credit are only for those companies that have been in operation for at least two years. They are lenient with their credit score requirements and look at other factors such as bank account history and business revenue.
Crowdfunding also involves receiving money from several different people but here you do not know any of them. It is usually based of an online campaign where you raise money for your company by appealing to the general public. The start up loans for small business with bad credit can help you get the funding required without having to sing a contract with a financial institution.