Challenged Credit? There Are Still Business Financing Options
There are a number of ways your credit score can take a hit and, unfortunately, fewer ways to repair the damage. If bad credit has you thinking your chances of finding business financing are nil, you may just need to explore less traditional options. There are a number of smaller lenders that are willing to ignore past financial struggles if you can make them feel confident in your ability to repay the loan.
The issue with the larger banks is that they have too many applicants to take the time to really assess someone with mediocre credit. If you’ve ever applied for a credit card online and been denied seconds after clicking “submit,” you understand that these institutions are looking to immediately narrow the number of applications they have to process. This can seem very defeating, but it only means you need to look to other sources that can benefit from loaning you money. Remember that business financing is also a business; you’re needed as a borrower as much as financiers are needed as lenders.
With that in mind, the optimal situation is to find someone looking to invest in a small company that he or she can have some control over. This option will likely require you to give up a stake in your company, though that’s a small price to pay for getting paired with a lender that can also offer business advice. A private investor may be a family member or someone who makes a living investing in small companies. If you don’t have an immediate connection to someone who might let you borrow money, search online for companies that match startup businesses with venture capitalists. This form of lending is growing in popularity and helping more people overcome bad credit and receive business financing.
In order to secure a loan from an individual, you need to be able to put forth a sound business strategy that will give an idea of how and when you’ll be able to pay the money back. No matter how charming your smile is, people can be very guarded with their money and won’t want to part with it unless they feel sure it’s coming back. If you think people should believe in your business, prove to them why.
Millions of people have dealt with bad credit and still started their own companies. If you take an outside-the-box approach to business financing, you too can be one of the proud entrepreneurs looking at your low credit score in the rearview mirror.