The dream of running and managing your own business has been on the minds of nearly everyone these days. Being an entrepreneur is a powerful tool that can provide a world of independence and freedom if done right. Still, running a business on strictly cash basis is all but impossible for many.
Whether you are just getting started or you’re just trying to stay afloat through the lean times, a business loan may be able to get you through. But what can you do to get that cash infusion when you have bad credit? Here are a few suggestions.
IMAGE: PEXELS
Look For Alternative Lenders
Depending on how low your credit score is, traditional bank loans may be more of a hassle than you may expect. Seek out opportunities that may stray from the norm. For example, if your business accepts credit card payments you could take out a merchant cash advance against your future credit card receipts. With this type of loan, your past credit history is not as important as your steady stream of customers.
It’s crucial to have a solid repayment strategy to mitigate any potential credit risks. If you run into unforeseen issues, consulting MCA attorneys in case of complications can provide valuable guidance.
Consider A Microloan
While applying for small business loans for bad credit may be out of your reach, you can reestablish your credit by getting a microloan. These usually are issued from credit unions or non-traditional financial institutions.
They are much easier loans to get because the amounts are considerably less than larger loans. For that reason, the credit requirements are much lower. The Small Business Association has its own microloan program as well as other lending sites that make it pretty easy to get the cash you need.
Get A Small Business Loan
The SBA may be able to assist you in getting the funding you need. This works for those businesses that have a moderate credit score (650 or above). They help to lower the risk for lenders by guaranteeing a percentage of the total loan amount. If your credit score has not taken a significant hit or it has just dropped because of hard times, this may be a pretty good option to consider.
A Secured Credit Card
A good way to reestablish your credit is with a secured credit card. This is very easy to do especially if you don’t need the cash right away. By providing the lender with a cash security deposit, you reduce the risk to the lender. If you fail to pay your bill, the creditor can simply take the payment out of your deposit.
If you regularly pay your bill on time, the creditor will eventually return the money to you. Don’t get a secured credit card confused with a prepaid card. While they both require you to pay money up front, a prepaid card is not a loan from the institution. It is using your own money, which will not improve your credit score.
Start A Crowdfunding Campaign
Crowdfunding is one of the newest ways to generate capital in a hurry. You’ll need to do a little bit of work to get it set up to get started. Once you create your profile, explained your goals and strategy and what you expect to achieve, your cash should start flowing in.
While this is a fast and easy way to get money, we don’t recommend that you rely solely on crowdfunding as it can be sporadic at best. To make sure your proposal doesn’t get buried underneath a barrage of mediocre campaigns, make sure that your pitch offers something to peak the donator’s interest, and they will benefit from.
Needing a little extra cash is not a sign of bad business. It just means that your business is going through a rough patch. Many businesses find themselves on the negative side of a credit score from time to time.
But that doesn’t mean that funding is not available to you. Whatever route you take to get the cash you need, make sure you use it so that you can improve your credit score and push your business into a more favorable financial position in the future.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
COMMENTS