As an entrepreneur or business leader navigating through the oftentimes stormy waters of business management, there can be multiple setbacks that might hinder your progress. But perhaps no hindrance proves to be as irksome as the one involving your credit score. Bad credit can severely restrict your access to traditional financing, especially when it comes to securing quick credit to either sustain or expand your business.
However, there is hope for those with less-than-stellar credit scores, as there are funding options that focus more on the potential of the venture rather than your financial past. This article by Matt Teeple will guide you through alternative financing choices and strategies to get your business funded, even if your credit score is less than ideal.
Matt Teeple On How To Get Your Business Funded, Even With Bad Credit
1. Alternative Lenders
Topping the list of non-traditional funding sources are alternative lenders that can provide quick and flexible loans, says Matt Teeple. These entities differ from conventional banks and financial institutions. While banks rely heavily on credit scores, alternative lenders analyze various parameters such as cash flow, revenue, business performance, and more to assess a business’s creditworthiness. They are more likely to extend credit to businesses that show robust potential in the long run, even if the personal credit history of the founder doesn’t sparkle.
2. Crowdfunding
With the boom in social media’s reach and audience in recent years, crowdfunding has surged in popularity as the go-to funding source for entrepreneurs with innovative ideas. Platforms such as Kickstarter, IndieGoGo, and GoFundMe provide a convenient route for businesses to showcase their projects, attract potential backers, and raise capital. Since crowdfunding bypasses the need for credit checks, it can be an excellent option for businesses without a decent credit score but with a compelling business plan.
3. Grants and Competitions
Another way to win financial support for your business is by entering competitions and applying for grants. For instance, local chambers of commerce and specialized organizations such as SCORE often organize contests where businesses can pitch their ideas for the chance to win cash prizes. Additionally, private foundations and government departments routinely offer grants to support specific types of businesses or causes. Although this route can be a bit time-consuming, it’s worth the effort since it eliminates the need to repay any funds.
4. Vendor Financing
If your business deals primarily with suppliers, you can explore the possibility of vendor financing. This strategy involves requesting credit from your suppliers – for instance, obtaining materials on credit – and repaying them at a later date. By doing so, businesses can access crucial items for their immediate needs without having to rely on traditional financial backing. It’s essential to display trustworthiness and negotiate the terms with your vendors.
5. Business Credit Cards
While not the most preferred option, business credit cards can provide a temporary financial boost in times of need, says Matt Teeple. Shop around for credit cards from issuers that cater to businesses with bad credit. Although the interest rates might be higher, this option enables you to access funds without putting your business on hold. Make sure to be disciplined with your repayment plan to prevent further damage to your credit score.
Matt Teeple’s Concluding Thoughts
In conclusion, bad credit need not stand in the way of your entrepreneurial dream. According to Matt Teeple, by considering the alternatives mentioned above and identifying the right mix for your unique situation, you can overcome hurdles and lay the foundation for a thriving business. Always remember that consistent monitoring and improvement of your credit score will open doors for more financing options in the future.