Four financing ideas for small businesses with bad credit
You might have decided to start a new business venture that needs hands-on supplementary funding. But, the problem is your credit history. A bad credit score might have reduced your creditworthiness. The first thing that comes to every entrepreneur’s mind is, how are they going to secure funds for their business in such a situation?
A borrower’s personal credit history plays a major role in financing their small business. Apart from this, lenders also examine the potential of the borrower’s business model, their overall experience, and equity investment in the business.
However, when it comes to small business financing, some lenders are willing to be a little more lenient.
Here are some creative ways through which lenders can provide supplementary funds, or finance your small business completely:
- Microloans : These are the most common sources of small business financing for entrepreneurs who are in need of quick cash for their business. Loan amounts offered under microloans may vary from $5000 to $50,000 based on the business module. Microloans are a good way to improve your credit history as it is comparatively easier to pay off these loans. However, the downside of taking microloans is their high-interest rates (which can soar up to 20%). Hence, it is advisable to pay the monthly installments on time.
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