Entrepreneur Funding Options for People with Bad Credit

BY: ON FRIDAY, MAY 05, 2017

Entrepreneurs are driving the economy forward. More people than ever are taking a leap of faith and starting a business. It’s an exciting time, with a wealth of opportunities out there for anyone with a great idea and the wherewithal to make it happen.

You don’t need a huge amount of cash to start a business, but if you want to borrow money from a traditional lender, a poor credit rating will hurt your chances. Lenders look at a personal credit when making a lending decision. Anyone with a history of debt is going to find it hard to secure a business loan or merchant account. The good news is that there are other ways to source startup capital. Let’s take a look at the options.

Friends and Family

Your first port of call should always be friends and family. If you have a great idea, this should smooth the way. You may need to use your powers of persuasion to encourage a loved one to hand over their hard-earned cash, but if your business idea is sound and you can prove you can better handle your finances now, it is worth a try.

Short-Term Loans

If you don’t need much money to start your business, consider taking out a short-term loan. People with bad credit typically pay much higher rates of interest, but lenders don’t look at your credit history, so you are unlikely to be knocked back for a loan.

Guarantor Loans

Guarantor loans are a better choice than a high-interest payday loan. You will need a guarantor on the loan, but interest rates are lower and therefore the payments are more affordable. You can borrow the money for 1-5 years and pay back what you can afford. It’s an excellent way of funding a business startup.

Credit Cards

Don’t overlook credit cards. For short-term funding, they are useful. If you have bad credit, you won’t be able to apply for a regular credit card, but there are lenders who are willing to work with people who have a poor credit history. If you are accepted, it gives you the chance to rebuild your credit record and fund a startup at the same time.


Crowdfunding is the modern way to fund a startup. There are several popular crowdfunding websites to choose from, including Kickstarter and Indiegogo. Pick the one that best suits your business idea. Write a compelling pitch to see if anyone will help you make turn your dream into a reality.

Borrow Against an Asset

Do you own something of value, for example, a car or a property? You don’t need to own the asset outright; you just need some equity. There are lenders who will lend money against the equity in an asset. If you fail to make the repayments, they seize the asset to pay off the debt. It’s low risk for them, so your bad credit rating is not a barrier.

Don’t be discouraged if you don’t have any cash or a bad credit rating. There are always options out there, so keep plugging away until a door opens for you.

Image via Shutterstock

About the Author

Boris Dzhingarov

Boris Dzhingarov graduated UNWE with a Major in Marketing. He writes for several sites online such as Tech.co, Semrush.com, Bizcommunity, Socialnomics.net. Boris is the founder of MonetaryLibrary and Dzhingarov.com.

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