Starting a successful company often entails taking a loan. One of the most important things you’ll need to get for your business is equipment. Unfortunately, having poor credit cripples your chances of finding a lender that is willing to lend to your cause. Luckily, there are other methods of obtaining the money you need to finance your equipment. Statistically, bank loans actually only account for 25% of all funding in small businesses. Here are some other sources worth considering:
1. Micro loans: In the microloan process, nonprofit organizations serve as intermediaries and loan out small lump sums of cash to small business owners. With the average microloan being about $13,000, microloans can provide a good source of funding for small business owners who have poor credit. Keep in mind that there’s a caveat: interest rates will generally be higher for these types of loans, but they are also more easily acquired. These loans can also provide a method of rebuilding a low credit score.
2. Merchant Cash Advance: Cash advance providers supply you and your firm with cash in return for future sales. They provide money for businesses and don’t usually require a good credit score or collateral. However, they charge hefty interest rates and provide a relatively short time to pay back. Make sure to shop around to find the best possible rates. Biz2Credit can help.
3. Improve Your Credit Score: This obviously takes time, but there are many ways to improve and fix your damaged credit score. Keep tabs on the state of your credit history; there are many credit ratings agencies at your disposal. Make a habit of paying bills not only on time but even ahead of time. Be cautious to not mix business credit cards with personal credit cards. Do not make the mistake of opening too many credit accounts either, assuming that this will increase available credit. It is a far better idea to have one credit card and pay it off completely every single month. Besides, every time you open a new credit card account, your credit score will go down a little bit. If you’re already struggling to repair the score, this isn’t worth it!