Good credit scores a way to leap off and launch your own business. Your idea doesn’t simply require money but it’s also asking for your passion and devotion. And whether you like it or not, worrying about how to finance your plan is something that no one can control. But what if you’re currently struggling with bad credit? Does that mean you cannot be an entrepreneur? The answer is NO! there are different variables of lending that is achievable.
I’ll show you the way on how to get funded for business loans even with bad credit.
What is Bad Credit?
Credit score sums up your monetary habits that include your payment history. It looks simple yet this number will define your future, if you have a bad credit score because of your past debts and payment behaviors, most probably you’ll end up having a low score or bad credit.
Scoring models are used to check your credit score, one of the well-known models is the FICO score. It can hit the rock bottom as low as 300 but for you to be an eligible loaner, you should have at least 600 FICO score. It is really risky to have this kind of credit score and to set your expectation, each lender sees credit score as your credibility to pay.
How Can You Get a Business Loan with Bad Credit?
Lenders vary from one another. Some lenders provide opportunities that can help you build your thoughts as solid as it can be. Usually, lenders are basing your creditworthiness if your score ranges from 500 up to 650. They consider as well your annual income, your business’ lifespan, and if you experienced bankruptcies before.
But there are still lenders who don’t have any limit or requirement to attain. These are the companies who give chances to people whose business plan could be executed well and if it’s strong enough not to be risky.
What Are Your Options?
Bad credit is not really a hindrance for you to pursue your business. There are limited options that are not ideal but you could always go to.
Most banks will check your past performance and if your company is just new, they require your detailed financial goals and a business plan to ensure your business of course. Nevertheless, the lower the credit means the higher the interest rates would be implemented. Banks will always use credit score as their standards when it comes to lending.
And here are the options for bad credit loans:
Angel Investors – these lenders will help you pursue your dream if you show them and prove that your credit score is just numbers. They can talk to you personally to check what’s on your mind. Make them smell you’re up for this challenge, never miss this opportunity to present your plan very well.
Friends and Family – these are the people who know you as much as you know yourself and what you are capable of. Communicate with your friends and family, aside from them being potential lenders, they will never see you as your credit score projects you to be.
Crowdfunding – investors in this method don’t just settle for a slightly-failed business that is new in entrepreneurship. The best example of this scheme is the tool called Kickstarter, they help in making your small business big so long as it is creative and odd. And since investors in this variant donate individually, they highly consider if your business is innovative and from there they’ll take the risk for you.
Small Business Grants – Grants is really not counted as borrowed money, this is a wish come true for some since you don’t need and you are not required to give it back. Usually, minorities are the one who gives out this promising donation, this includes members of LGBTQ community together with empowering women who want to help aspiring entrepreneurs.
Believe it or not, we only want what’s best for you. Choose from the ways we listed above and research what’s the best thing that will work for you and from there, your business will surely grow.
It’s really bothering to have bad credit scores but make it as a motivation for you and your plan’s betterment. Focus on what you have right now and exhaust all your resources, you are full of potential and make it count. There’s nothing wrong with your numbers but also make sure to do the right thing and we can confidently say that once you accomplished your business idea, money will easily follow.