There are 28.8 million small businesses in the US according to the US Small Business Administration. You, as a business owner, should know that your credit score is going to play an important role in getting approved for business funding. Of course, good credit will make things easier for you, but if you have bad credit, you’ll have a problem finding funding for your business.
However, bad credit doesn’t mean you have zero chances. You can look for funding opportunities that can help you get your score back on track. Below you can find some ideas that will help you overcome the challenges brought about by your low credit score.
Credit Cards and Bank Loans Aren’t the Only Means of Financing
Business loans, credit cards, and lines of credit account for about 3/4 of financing for new firms, according to the SBA. Studies in the field show that credit card and bank financing represent only 25% of the total funding needs of new businesses. Those who have bad credit can try, e.g., a home equity line of credit, but you’ll be required to put your home on the line.
Turn to Alternative Lenders
According to Biz2Credit, in March 2016, big banks approved 23% of funding requests, institutional lenders approved 62.8%, small banks approved 48.7%, alternative lenders approved 60.7%, and credit unions approved 42% of loan applications. Alternative business loan providers like First American Merchant have become so much popular in recent years. FAM is a reputable business funding provider that offers business loans no credit check. First American Merchant boasts an A+ rating with the BBB and offers exceptional financing opportunities to merchants of any type.
Turn to Your Relatives and Friends
Over 50% of all business owners get financing help from friends and relatives. This is the case when your poor credit score won’t hurt you since your friends and relatives trust you or they think your business is going to be a success. As a rule, the friends and family relationship is also flexible in terms of repayment options and interest rates.
Consider Gifts and Grants
Look for government grant programs. Take the time to research and find programs that are available for your type of business. Healthcare and retail businesses, as well as technology companies in low-income areas usually qualify for grant money. You can also take advantage of gifts from relatives, free office space from former employers, and free services from friends or business associates.
If you have bad credit, it’ll be challenging for you to get approved for business funding from a traditional bank or financial institution. You should look for business funding options for your type of business. Consider applying to alternative lenders that are ready provide your bad credit business with the necessary funds.