Want advice for funding your startup? Click here to find out how to get the funding you need in our guide to startup business loans!
While millions of people struggle with negative marks on their credit score, many customers with bad credit can still get loans.
Even if your credit rating is as low as 550, you can still receive funding for your business. Startup business loans are available for most entrepreneurs with great ideas and innovative projects.
Here are five ways you can get a loan, no matter what your credit score.
- Ask Family and Friends
Before you start applying for loans from a bank, talk to your family and friends about the project you want to start. If you’ve got a great history of working hard and hustling up the ladder in every industry you’ve tried your hand at, your loved ones will be happy to help you.
Talking to family and friends can be a great way to get started at perfecting your pitch. However, you shouldn’t take them any less seriously than you’d take a meeting with any other investor. Their money is just as meaningful to them as someone who is a millionaire.
Ask if they know any people who could invest in your business. Request their honest feedback as well. Just be sure to steel yourself for what they might have to say about your presentation went or how they feel about your startup.
You could sharpen your business plan and prepare yourself for big-ticket investors by practicing with people you know.
Getting involved with friends and family in a financial situation can be stressful, so think twice about it and put everything in writing. This will protect all parties no matter what happens.
- Search for Investors
Beyond people you already know, it’s now time to start hunting for more investors for your business.
Start by reaching out to your network and looking for friends of friends. Having any kind of personal referral at all can get you in front of people with money.
There are also websites and directories where you can post your project in search of angel investors. Those people may want a share of your business in exchange for their initial investment. Value your business somewhat generously by looking at what other companies like yours are worth.
Start hunting for investors who are familiar with projects like yours so that they’ll understand your vision.
You can also pursue help from crowdfunding websites. While these might be kitschy for the kinds of products and services you’re offering, they are a good place to start. You could end up getting reliable funding from people who are genuinely excited about your project.
If they share a link to your crowdfunding page, you could garner further interest quickly.
- When You Have Good Credit, Get a Loan
If you’ve worked hard to build your credit, you could get a loan to start your new business.
While you’ve built your good credit history, your financial institution will have seen evidence of your credit history. They’ll be able to judge fairly what your credit looks like and may give you a loan based on your good behavior.
Good credit means that you can have access to long lines of credit that can make a powerful impact on your future. However, it can turn bad quickly if you’re not responsible for your spending habits.
Opening a business is a massive venture, and it often starts with the management of hundreds of thousands of dollars.
If you need a loan, this is likely the first time you’ve had access to this kind of money. Be careful and stay focused on your goals; otherwise, you could make mistakes that will leave your business hopes quickly dashed.
- You Can Still Get a Loan with Bad Credit
If you have poor credit or you’re struggling to repair your credit from mistakes in the past, don’t beat yourself. You can improve your credit score with a little bit of work and some smart changes to the way that you spend.
You need to build your credit over time, but you might require a loan right away for your startup. If you turn to a bank or a large lending institution, they might only offer you secured loans that require a buy-in. They might only allow you to get loans with absurdly high interest rates.
Thankfully, some lenders are more flexible and can give you a good loan at reasonable rates. Check out this website for a few of the best options out there.
- Separate Business from Personal
If you have bad credit, it doesn’t mean that your business is doomed to fail. Just because you’ve had problems keeping your financial affairs in order, you can still have a successful business in good financial health.
All it takes is some willpower and smart allocation of funds. If you’re able to keep your personal funds separate from your business funds, you can grow your startup — no matter what financial decisions you make. Starting an LLC can give you the financial protection of your personal assets when running your business. Just make sure your business gives you a paycheck at the end of the day. Focus on generating revenue, and invest that money in your company.
Startup Business Loans Help Ideas Soar
If you have access to startup business loans, you can bring your vision to life and build a strong foundation for your future. A small business loan might be all you need to turn a small idea into a small industry.
Once you’re up and running, follow our guide to ensure you get the most from your employees!