Credit and Small Business Owners

Some might say that owning a home is the American dream. Small business owners, however, think that owning their own business is the true American dream. Of course like all the good things in life, there is nothing easy about owning a business. It has its problems, and sometimes the fatal one is—bad credit. Whether you like it or not, when it comes to financing, if you have a high score you will have an easier time getting credit card offers from a variety of sources, loans and leases. If yours is low or non-existent, you won’t.

What’s the Trick(s) for Small Businesses with Low Scores Who Need Funding?

Courtesy of Entrepenuer.com ...here are some ideas.

Credit cards and bank loans aren’t the only way to go. Studies show that credit card and bank financing account for only 25 percent of total funding needs for small businesses in their early stages. Yes, there are credit cards and lending programs designed for small business owners suffering from bad credit, but these guys usually tend to charge higher interest rates.

Your friends and relatives: Studies also show that 50 percent of business owners get finance help from friends and relatives. Hopefully, the people closest to you in your life know you beyond a credit report and will want to see you succeed as much as you do! Banks, for example, tend to judge your character based on your credit report alone.

Non-bank lenders. There are a lot of non-bank lenders on the web that now offer micro loans to entrepreneurs. Some of these sites are great resources of capital for those with poor credit and will also report your payments to credit bureaus which can improve lenders/investors.

These sites include:

• www.accion.com
• www.prosper.com
• www.zopa.com
• www.count-me-in.org (for women business owners)
• www.americaonefunding.com

Don’t look a gift or grant horse in the mouth. Take advantage of free money in the form of gifts or grants. However, you will need to do your homework on this one in order to find government grant programs that are available for your type of business. Be creative and you can potentially reduce your start up costs by brainstorming a list of people who would be willing to provide you with gifts and unsubsidized loans.