Options for Starting a Small Business Even When You Have Bad Credit
Opening your own business can be complicated in today’s economy, especially if your credit is not in good shape. Fortunately, there are many resources available to ambitious entrepreneurs who are ready to take on new and exciting ventures. If you would like to become a small business owner without worrying about the negative influences of the past, consider these reasonable alternatives to help you get started on the path to personal and professional success.
Home Equity Startup Loans
Although it may be considered a risk for inexperienced business owners to resort to a home equity loan for new startups, it is one of the easiest ways to cover expenses regardless of poor credit. For those who have invested a significant amount of cash into renovations and upgrades over the years, this helps establish a foundation for a substantial line of credit in your name. Furthermore, home equity loans provide you with a convenient opportunity to find out the value of your property and use it as a bargaining tool for financial negotiations. Just remember that your home is ultimately on the line if you fail to meet the terms of the agreement.
Private or Peer to Peer Lending
Another viable option for starting a small business is to explore private or peer to peer lending opportunities. This is becoming increasingly more common as family members go into partnerships together and groups of investors look for a return on unique entrepreneurial ideas. In addition, friends and family members who help out with the initial funding of your business are less concerned about low credit scores, while contracts with individual lenders offer much cheaper rates than most banks. However, peer to peer loans are best utilized for startup costs that are less than $25,000.
Equipment or Inventory Financing
A third source of funding frequently used to support the growth of new businesses is a financing agreement through a reputable vendor that allows you to purchase the products and equipment you will need to get started. Not only is this a more affordable option for small business owners, it is also a great way to repair damaged credit history over a period of time. This means you must make regular payments to avoid penalties that will reflect in your credit scores and result in the loss of goods or services.
Owning a small business has never been easier for people with a variety of marketable visions and ideas. Don’t let bad credit discourage you by exploring alternative options today.