Is it possible to start my business with bad credit and with no money? The answer is yes. A lot of people are doing this as they build up their confidence and to better their credit scores in the future. If you are considering starting your own business, be sure to pay attention to your credit score.
Having bad credit has always been considered one of the worst things that you can have. So, you may think that starting a business without any money at all is an impossible thing to do. You would be wrong.
Businesses need constant funding to run continuously. Moreover, a start-up business requires a lot of money to set up a business structure. New entrepreneurs have a difficult task ahead while setting up new companies. Business loans can offer them the support they would need.
However, most lenders offer loans only to businesses that can provide good creditworthiness. As a new business owner, you do not have enough experience to showcase credit worth. The lenders will refer to the business owner’s credit score and credit history. If, as a business owner, you have a poor credit score or account, you might find it challenging to get your business off the ground.
Does this mean that you can’t start a business with bad credit can no money? Not really. If you genuinely believe in your business plan and are ready to put in the efforts into it, you can kick-start your business well. Below are some tips you can follow to start your business.
Check out lenders who don’t rely on credit score
While banks rely heavily on personal credit to offer you a loan, many lenders accept individuals with lower credit. These lenders are non-banking institutions, private lenders, online lenders, micro-lenders, etc. You can obtain small loans from https://www.rafflescredit.com.sg without having to provide a high credit score. These lenders typically have a higher Interest rate, though, so make sure you factor that before you apply for a loan with them. There are chances that they might ask for collateral as well.
Try to draw in Investors
Investors are always ready to put their money into a well-planned business in exchange for some share in the company. Draft a proper business plan and approach investors. Try to convince them of the profitability of your business and how much you expect it to grow. Investors are one of the best ways to fund your start-up.
Look for other forms of credit
While a business loan might be difficult to avail of if you have bad credit, the bank might agree to a credit card. Although credit cards have a lower limit, they also have lower Interest rates, provided you make timely payments. Credit cards can be a great way to obtain the necessary funding.
Watch out for grants
Search for government or non-profit grants that can apply to your business. Grants are provided for some particular businesses such as Healthcare business, technological businesses, businesses aimed towards low-income groups, etc. Many non-profit organizations are offering grants for companies that can help with their needs. Make sure you do proper research to avoid falling into scams.
Try reducing your expenses
Figure out your necessary and avoidable costs. Prioritize what you need for your business and only spend on the essentials required to create your product. This can mean limiting employees, applying for only essential technologies, taking care of marketing and promotions on your own, etc. The lower the cost of business, the easier to set up.
Ask for gifts from friends and family
Although this might seem complicated, don’t say no to donations from friends or family. Your friends and family might even be able to provide some funding to help support your business. Gifts such as vouchers, free professional services from friends, free assets, etc. can go a long way to start your business successfully.
Set up your store online
Starting a business online requires the least expense. You can easily set up your website in a short time with minimal funds. You will also save on rental space working from home. This will only apply to businesses where you don’t require heavy equipment to manufacture your product. There are many businesses that you can offer completely online such as life coaching, mentoring, consultancies, web designing, etc. Businesses like require the least amount of investment and have good returns.
Consider old-school barter
If you are starting a business that requires purchases, consider offering some form of exchange instead of money. You can consider offering professional services or some other type of product in return for your purchase.
Try and improve your credit
You cannot stay with bad credit forever. Bad credit can generally mean a high amount of unpaid debt. It will be unmanageable to pay it off, with an added overhead of a new business. However, do consider setting up a plan to pay it off, even in small increments ultimately. This will help lenders and investors have a little more trust in your business plan and credibility. It will slowly improve your credit score too. Small steps can still make a difference. Your debt will eventually be paid off.
Opt for non-conventional funding options
Non-conventional funding options include obtaining funds from Venture Capitalists, Angel Investors, etc. They cater specifically to new businesses and start-ups. Along with funds, they can also offer guidance to new entrepreneurs.
Peer-to-peer lending is also an option where multiple lenders will fund your loan. As the risk factor is low with multiple lenders providing short amounts of money, your credit score won’t impact your eligibility.
Cash Advances is a method wherein you can provide an invoice of your sold products to the bank and acquire the funds equal to the bill amount. You can then repay that amount to the lender when the customer settles the bill. Your credit score won’t be a criterion for cash advances.
Take upfront payment
Consider upfront payment plans for your business end-product. Many businesses follow this rule and offer subscriptions and offer by asking for product payment beforehand. This will ensure that there is money coming into your business. This will help showcase business stability too.
A company that specializes in helping people with bad credit can usually find loans for you can even pay off your loan. So, if you are ready to start your own business, start re-establishing your credit history today. It is only right to use your own money to start a business if you have had your first few bad credit purchases, so why not start with a new start today.