Have you embarked on the exciting and rewarding journey of business ownership?
If so, you're certainly not alone. With 99.7% of U.S. businesses being small operations, finance options are a hot topic. In 2014, 5.2 million loans under $100,000 were issued by U.S. lending institutions.
If you have recently written an in-depth business plan, you may have realized that you require funding. In order to kick start or expand your small business, you're looking for funding options, but there's just one problem -- your credit is terrible.
Where do you turn now?
Although a poor credit score may show lenders that you haven't properly managed your finances in the past, there are ways to secure a loan with bad credit. This is your time to take an educated risk, building your business from the ground up -- and a traditional loan is not your only option.
Many believe that banks hand out loans left, right and center. Even among those with decent credit, banks simply aren't lending to small businesses as they once did. Whether you're aiming to pay off credit card debt, upgrade equipment or even move your business, a loan can help you achieve your business objectives.
Traditional lending institutions consider factors such as how long you've been in business and even the industry you're in. However, your credit score will typically make or break your application. If you have been denied, there's no need to worry -- alternative solutions are available.
In fact, it's estimated that banks only currently approve 19% of lending applications, in comparison to a 64% approval rating among alternative lenders. When you seek these types of financial options, you will often receive the capital you require much easier, and much more rapidly.
So you need a loan, but your credit stinks -- what now?
If your credit score is less than ideal, don't let that hold you back from starting or even growing your business. Of course, it never hurts to inquire about your options with a traditional bank, but if you're denied, don't give up. Instead, take the following steps in order to secure funding.
Step #1: Ask for a loan from friends and family
When we're in need, we often turn to those we love and trust -- and just as you trust these individuals, they trust you. Unlike a bank, who will judge you based on your credit score, a family member will know your character and may even truly believe in your business concept. Of course, this type of agreement needs to be approached with caution, as you wouldn't want to risk a close relationship over mismanaged money.
Step #2: Work with a broker to seek non-bank lending
Business loan brokers can help you determine which funding option is best for your business needs. Whether you're looking for a business loan or a merchant cash advance, a broker can help protect you from being taken advantage of. With immediate access to high-quality lending partners within a secure portal, you can gain access to the capital you need quicker, based on options provided for those with poor credit.
Step #3: Utilize your assets
If you currently have any valuable assets, such as property or machinery, you can use these types of financial assets to leverage value and security. This is often the case for what's known as hard money loans. Companies and individuals will provide the capital you need based on collateral.
Bad credit no longer needs to stand in your way. As you continue to rebuild your credit, you can start and grow a successful business. Explore your options in order to become the business owner you have always strived to be.