If you have dreams of starting a business but are lacking in the money and credit department, there’s hope for you yet.
You may have considered bad credit business loans; however, a major caveat is that many of these lenders require the business to already have a proven track record and a minimum required business income.
So if you’re just starting out and don’t yet have any sales on your side, what can you do?
Here’s how to start a business with no money and bad credit.
1. Look for Grants for Your Business Type
One of the first steps you can take that does not require a credit score, is to see if you qualify for any small business grants.
It’s not always easy to find this sort of funding and will require a lot of research on your part. But it’s worth it if you find one that’s a good fit for your business type.
Businesses in healthcare, retail, and technology often qualify for these grants as well as those in low-income areas. Keep in mind that any money received in grants has to be used for specific purposes, so they are not as flexible as small business loans.
2. Home Equity Loan
Another option is to take out a home equity loan. You can qualify for these loans even with bad credit because your home is used to guarantee the loan. This is risky because you’re putting your home up as collateral if you default.
The upside is that, similar to small business loans, there are no restrictions on how you can use the money.
3. Consider Microlenders
If you can’t get a loan from a bank, there are nonbank lenders that provide microloans to startups. These microlenders offer loans up to $25,000 and will report timely payments to the credit bureaus.
This serves two purposes–you get the money you need and you can start working on your credit.
4. Look to Family and Friends for Help
The Beatles sang about it and it’s true, we all get by with a little help from our friends. Who wants to see you succeed more than friends or family?
When you’re eager to start a new business that you know is going to be profitable, your closest circle is likely going to want to play a part in your success.
It doesn’t hurt to ask and once your business becomes profitable, you can pay them back. Then you can work toward step five below so you never find yourself in this predicament again.
5. Start Taking Steps to Improve Your Credit
If you’re in the early stages of starting your business, before you start looking at the options above, start taking steps to improve your credit.
Doing so will make it easier for you to qualify for small business loans and to choose the one that is best for your company.
Consider debt consolidation to lump all your unsecured debt into one single payment. Ensure all of your bills are paid on time, every time, and keep those credit card balances low.
In time you’ll see big changes to your credit score.
How to Start a Business with No Money and Bad Credit and Ensure Success
Now you know how to start a business with no money and bad credit. You also have the knowledge to turn that around and increase your bank account and credit score.
Looking for small business loans for your company? Get in touch with us about our easy business loans today.