There aren’t many businesses that you can start with no starting capital. Even those that you can almost always benefit from having an early extra injection of cash. Being well funded from the start can help you invest in things like marketing and building brand awareness. It can also be used to lay the foundation of a strong online presence.
However, getting financing as a budding business can be tough, especially if you don’t have the best credit yourself. This doesn’t mean that there’s nothing you can do, however. Here’s how you can start a business with bad credit, or no credit history at all.
Check Your Credit Report
The first thing you have to do is make sure that you get a copy of your credit report. Your credit might not be as bad as you think. Some or all of the negative entries on your report may have been erased if it has been a while. As a rule, most bad entries will be removed after 6 years, and that includes things like credit card debt.
You also want to make sure that there aren’t any mistakes in your report. Just one could end up hurting your chances of getting financing severely. So, get a free copy of your report from Equifax, TransUnion, or Experian, and contest anything you think isn’t right.
Make an Inventory of Your Assets
The next thing is making an inventory of your assets. There are some things that you may be able to salvage and sell to make a little money. You also have to consider if you have enough equity in your property or any vehicle you may have. These are all things you could get a loan for. Consider any liquid assets or investments you may have as well.
Look at Alternative Lenders
Next, you should start looking at all the financing options available. There are tons of alternative lenders out there that might overlook your bad credit in favor of other more important factors. Lenders like Advance Point Capital, for instance, will look at the business as a whole.
Lenders like these will pay attention to other indicators of health, like cash flow, for instance. They understand that a business may not have had the time to establish itself and that credit score is not the only measure of how profitable a business is. Also, make sure to look at things like merchant cash advances, equipment loans, and invoice factoring amounts.
Start Building Your Credit
Now is also the best time to start turning your credit around. If you want to improve your personal credit score, then getting a secured credit card is one of the best ways to do so. These cards require that you put up a cash deposition that will serve both as collateral and your card limit. This will allow you to prove your trustworthiness and comes with little risk.
If it’s for your business, you have to show activity by opening as many accounts with suppliers as possible. Make sure that they report activity to business credit bureaus. You, of course, have to make sure that you treat these accounts like gold and that they stay pristine. Even one missed payment is enough to ruin everything, so be careful.
So, if you wanted to start a business but were worried about your credit situation, follow this advice. It may allow you to get the starting capital needed to get things off the ground and generate enough income to become more attractive to lenders.