You have a bad credit rating, but you want to run a business.
This can be very good, as having your own business can provide excellent opportunities for improving your financial situation. But more often than, starting a business requires funding, and bad credit can prevent you from getting the necessary finances for your startup. Lenders risk each time, investing money in starting a business, because more than half of startups do not live to see their fifth anniversary. But it should not stop you from implementing your idea. Almost always you can find a way out of this situation. For a start it is worth considering what obstacles can nullify your efforts.
First, for a successful business you need a product that will be in demand in the market. This may be a completely new something, or an improvement to an existing product on the market. The idea may seem successful and necessary to people, but this does not mean that the market will also react. To do this you need to conduct a market research to understand whether the demand for your product will have a significant amount. You need a team that will help to do your business, built not from old friends, but from professionals in your field or at least from those who have skills in a certain field.
Also, you will need to calculate the amount needed to launch your product and finance the company until it starts, to make a profit. To finance a business from small own savings can be very risky, as it can drive you deep into debt, from which it will be difficult to get out. That is why you should start looking for sources of financing, despite your bad credit. In fact, there are several options for this situation.
Bad credit loans
With a bad credit you cannot count on bank lending. Such traditional financial institutions are not inclined to consider the situation of each individually. They trust the figures by which credit bureaus assess you. In order to receive financing from a bank you have to spend, perhaps several years to improve your credit status. You will need to learn how to manage your finances and loan obligations well. You do not have to delay payments, pay your bills on time and possibly consolidate your debts to improve your credit score. You will need to get rid of all the old debts and settle the outstanding debt.
Such measures allow you to show lenders that you are a reliable borrower who knows how to manage his finances and that you bear minimal risks. By improving your credit score over time, you get access to more different types of loans. You need to decide on which type of loan will fit your needs the most. There are many different lenders, in addition to banks and large financial companies. Modern technologies provide much more opportunities to search for creditors and select offers using the Internet. At the moment there are already many different online lenders. However, if you do not intend to lose few years, because your idea may become outdated or, for some other reason, lose its relevance, then you should look for companies that work with bad credit.
Where to find loan with no credit rating check?
There are various options for how you can get an amount large enough to start your business project. For example, such a financing option as crowdfunding. With this method of collecting funding for your startup, you place information about your project on a special platform. For example, one of the most popular today is Kickstarter, where people interested in your product contribute to the development and further launch of it. To get different people from around the world interested in investing to your business, you have to promise something useful in return. Thus, some of the most successful and interesting projects collect large sums in just a few days, others in a few months, and some do not gain enough popularity. It all depends on your product, its presentation to the general public and your company, which should inspire confidence in random people.
Naturally, no one there conducts credit checks, since the amount invested in the project is divided between hundreds and thousands of users and each of them carries minimal risk. Another option that is worth your attention is Square Capital mobile payment system, which only works with companies that already use their mobile payment service. To get a loan from them, you should already have experience interacting with them.
Are you ready to start?
Now you see that a bad credit rating is not an insurmountable obstacle for you to launch your business. You have many options to find funding for your project. You just have to decide and choose which one is the most suitable for you. You may either wait a few years, improving your credit score to get traditional bank financing, or contact lenders who work with bad credit, or it may be worthwhile to use specialized services to attract investments in your project.
In any case, it will not be superfluous to study this issue in more detail in our financial blog. You can also consult with our financial experts to get answers to all your questions and make the right choice in favor of one of the options.