When you’re funding your first venture raising the capital to make your startup take flight can be a difficult and stressful prospect. When you’re just starting out you’re an unknown commodity and if there’s one thing investors hate it’s unknown commodities. However brilliant your business idea, however confident you are in your product it can be frustrating and disheartening when door after door is closed in your face. If your credit rating is through the floor then the inherent problems are compounded, since many of the commercial lending procedures that entrepreneurs tend to go through may be closed off to you.
But don’t despair! Whatever your credit rating there will still financing be options open to you that can help turn your dreams of entrepreneurship into a profitable reality. The first step, however, should lie not in the acquisition of new debt but in managing the debt you already have.
Consolidate your debts
Business ambitions aside, it’s always a good idea to consolidate your debts from a financial and practical point of view. Managing a number of debts, each with its own repayment schedule and rate of interest can be a cause of great distress and confusion. Moreover, the more debts you have the less you’re able to trawl the markets for competitive interest rates, meaning that you could be paying off more than necessary. Consolidating your debts into a single monthly payment with a debt consolidation loan avoids overpaying on interest rates and makes your debt more manageable and less psychologically daunting.
Remember that it’s not your debt itself that results in bad credit so much as poor debt management. Debt consolidation can improve your credit score as all of your debts will technically be paid and you’ll just have one new debt.
Sell your home
If you’re supremely confident in your business idea and don’t mind sacrificing your home for somewhere more modest then you can sell your house for one of the many companies that pay cash for homes. This is ideal if you need quick cash although be aware that you may be offered below market value.
For entrepreneurs who only need to borrow a small amount of money get started, a micro loan may be the right option. Micro loans are smaller in size than most business loans, presenting fewer risks and therefore creditors tend to lend them more freely. Be aware that micro loans tend to have high interest rates in their monthly repayments which should be built into your monthly business cashflow.
Even if your own credit score is less than healthy, it needn’t necessarily impact poorly on your business, especially if the risk is shared by a business partner. Credit cards are a readily available and fairly affordable way of getting quick credit and so long as you can keep up the monthly repayments, they can ensure that your business’ credit score stays healthy.
Business cash advance
Like micro loans, business cash advances are a small, high interest form of capital that’s usually lent out to businesses with cashflow problems, though there’s certainly no reason why you couldn’t use one to cover your startup overheads.