Reliable Options For Funding a Bad Credit Risk

Pocket ChangeJanuary 25, 2018

What is financing? This is a process of funding a person or enterprise. Mainly, finance is given to people who want to start a business or improve their current business. In financing, terms such as high score or low score are used.

If you are considered to be having a high score it means that the chances for you to get a wide variety of offers from different funding sources are easy. But if you have a low score then you are doomed because you won’t get any offers.

Getting a low score does not mean that your business will be closed but you need to fund your own business. Through the process of funding your own business, you will start getting your scores back on track hence moving your business to the next stage.

The following are ideas that will help entrepreneurs with low scores and are having a problem with funding sources. It can save you from a big time financial misery.

Borrow loan

If you like the idea of being an entrepreneur and you do not have the capital for starting your entrepreneurship then you can acquire a loan from your family or even friends. Some of your friends and relatives would want to see you achieve the dream you have thus making them easy to finance you.

After securing this loan from your relative or friends, you can use it to rebuild your credit score. You can only rebuild your credit score if you used a loan management company to service the loan and the payments were reported to credit bureaus.

Accept gifts and grants

Getting free money which comes in form of gifts and grants should be frequently used. These gifts and grants will always make you avoid payments that come from debts.

Although grants and gifts help, they do not come easily despite searching them for long. You will need to do a lot of work to allocate programs that free money may be available for the type of business you want to conduct. Not all types of business that you may start qualifies for grants. Only a few of them such as technology companies, retail businesses and health-care businesses with low incomes are the ones that tend to qualify.

Grants and gifts also come from relatives and also from your former employer who may decide to give you a free office. Your business counterpart and friends can also offer gifts and grants by offering free service to you.

Investigate micro lenders

Do your research well on the internet and you will find people are mostly nonbank lenders but offer small loans to entrepreneur. There are a number of micro loans which they offer a range between $5,000 to $25,000. These nonbank lenders also report your payments to credit bureaus and if you pay in a timely manner it will increase your credit score. It will be good for you to compare the rates and price of the loans in the nonbank lender’s site. Some of these nonbank lenders sites are:

If you want to borrow money from this nonbank lender and you have a low credit score then you will be charged highly from the loan you want to access. Acquiring your business loan from friends and relatives have a very low average rate of 7.6 percent compared with others. This is according to Circle Lending’s Business Private Loan Index where it was more than 12 percent at Accion and it was more than 20 percent for individuals with poor credit. You can have affordable interest rates if you are accustomed to credit-card-level interest rates.

There are micro lenders who may be found in your state and they offer good and flexible terms for acquiring a loan. Unfortunately, they cannot be found on websites since they do not have one. You can always access these non-profit organizations from www.microenterpriseworks.org.

Look beyond credit cards and banks loans

Some credit cards and bank loans have been designed for people who have poor credit hence charging them higher interest rate. They charge high rates to compensate for the credit risk. Early stage entrepreneurs are accounted for only 25% for total funding from credit card and bank loans.