After years of working a 9 to 5 and getting nowhere in life, you decided to strike it out on your own. Unfortunately, all those years of struggling have left you in debt and, as a result, your credit score is less than desirable. In fact, according to all three credit reporting agencies, you have bad credit. Now you have a small business and are in dire need of financing. If you are wondering whether or not you can get financing with bad credit, there are ways you just might be able to make that happen.
1. Remember You Are Not Alone
Perhaps the first ‘tip’ you might want to understand is that you are not alone in your quest for financing for your small business. As a matter of fact, as many as 40% of other small businesses like yours apply for funding. The latest figures released by the Federal Reserve Banks in their 2017 Small Business Credit Survey indicate that almost half of the nation’s small businesses required funding or financing in that fiscal year. You are not alone, so don’t let something like bad credit discourage you.
2. Research Your Options
This is not to say that bad credit won’t present a few obstacles to overcome, but it doesn’t mean you won’t find the funding necessary to start or run a small business. Take the time to research your options because there are several available, even to small businesses where the owner has bad credit. For an existing company, there are loans that may not even be weighted heavily on your credit score! You might want to consider things like invoice factoring or cash advance discounting because these are based solely on accounts receivable. They are based on invoices you have outstanding and projected future sales. Check out companies like AdvancePoint for small business loan alternatives. Do the research and you just might find the financing you need, even with bad credit!
3. Be Realistic on Your Expectations
Just because you expect your small business to thrive it doesn’t mean it will do so within the term limits of a conventional loan. This is especially true of new businesses because they do take time to grow enough to realize a profit. For this reason, home equity loans and other types of loans based on the collateral of personal property may not be to your advantage. Yes, you own your property and are willing to get a loan against it, but is that wise if there are short-term time constraints? Be realistic in your expectations, knowing that you are not a fortune-teller. You expect to succeed this year, but the real turning point for realizing a profit might be in the coming year. Don’t lock yourself into a loan that threatens your personal property.
It always pays to take the time to know your options, but this is most important if you have bad credit. While you just might qualify for a conventional loan, there may be other avenues to explore which are less risky. Take the time to do the research but never throw in the towel before you know all your funding options. Bad credit small business loans may be harder to find but they are out there. It’s time to find the right one for you and your needs.