Need a loan for your small business but aren’t sure how you’ll get it? Here are 5 ways to get start up business loans with bad credit.
Over half a million Americans become an entrepreneur every month.
Do you have bad credit with an entrepreneurial mind? No problem! With the right strategizing and planning, you can still secure financing for your business dreams.
Let’s get into understanding the best start up business loans with bad credit.
Are you a minority small business owner? Do you come from an impoverished background? If so, you may be eligible to qualify for a microloan.
Microloans don’t typically look at creditworthiness. Instead, these lenders look at you and your business idea. Typically, they want to support and strengthen struggling communities.
2. Friends and Family
Many successful business owners get their initial mojo from their loved ones. Friends and family can be viable options if they believe in your visions, and they are willing to invest in your success.
That said, you inherently place people at risk when you mix business with family. Make sure that everyone is understanding of the limits and possibilities. Draft it out on paper to make sure everyone is on the same page.
Identify how, when, and what you intend to use this business loan.
Have you ever donated money on GoFundMe or Kickstarter? If so, you’ve probably contributed towards funding someone’s business plan!
Crowdfunding has surged in popularity over recent years for entrepreneurs. They offer an essentially free method of advertising and campaigning for your business. Similar to peer-to-peer lending (check out funding circle business loans for more on this), both investors and entrepreneurs can dramatically benefit!
Crowdfunding options vary. You can offer investors the choice to donate, receive rewards, or even secure equity in your company.
4. Small Business Grants
Grants are undoubtedly more advantageous than loans. Why? Because you don’t have to pay them back!
You just need to qualify for approval. That said, it can be challenging to receive approval.
Local, state, and federal governments all provide a variety of grants to help fund the initial startups of small businesses. However, many of these grants are designated for specific industries.
If you’re running a business specializing in scientific or medical research or conservation efforts, this may be the best option for you.
5. Personal Savings
Ineligible to qualify for any loan or line of credit? It’s frustrating, but there’s still a workaround.
From borrowing against your home to dipping into your retirement accounts, many business owners rely on their own savings to get started.
With this method, you don’t have to worry about paying anybody back. Furthermore, you don’t need to pay interest.
That said, there can certainly be tax implications. There can also be consequences regarding your financial well-being- especially if your business plan doesn’t pan out.
Final Thoughts on Start Up Business Loans With Bad Credit
There are numerous options to securing start up business loans with bad credit. You should take your time and research to assess the best option for you.
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