Running a small business with less-than-perfect credit isn’t necessarily an insurmountable problem. Even though it’s not always easy to secure credit if you have a low personal or business credit score, there are solid options to help grow your small business. Here are six ways that may help you raise money to help fund your burgeoning business:
If you make a minimum of five deposits monthly in a business checking account and have revenue of at least $100,000, you likely qualify for revenue financing. These come with interest rates that are slightly higher than mainstream bank loans, and loan terms of up to 18 months and no more than 10 percent of annual revenue. Payments are made daily, except for weekends and holidays.
If you have a poor personal credit score, consider asking someone willing to cosign on an unsecured business credit card. A business partner or someone interested in partnering can be great places to start.
Merchant Cash Advance
These programs offer cash-advance loans against your future credit card sales. The rates can run high—often close to 40 percent—plus a fixed percentage of sales until the loan is repaid. Before you leap into one of these programs, do your homework, examine all the terms and conditions, and make sure you’ll be able to handle these relatively high rates.
Family and Friends
Your family and friends know you and they love you. They also know all about your small business and believe in you. But do they understand all the risks? Will there be resentment if you’re unable to pay them back? Tread lightly here. Have long conversations that cover all details and all repayment terms. Loans from family and friends should not be handshake deals, but a detailed, signed agreement—even vetted by an attorney. They can also be logged into a site like LoanBack or ZimpleMoney, which are services that help facilitate these kinds of loans.
There are third-party services that may be able to lend you money. Upstart, Kabbage, OnDeck, and Funding Circle offer a mix of private loans, lines of credit, and peer-to-peer options for startups and small businesses. Rates tend to be higher than a bank, but can be very easy and quick to get, with easy-to-use online interfaces.
Local Grants and Loans
Check with the U.S. Small Business Administration , which offers excellent resources for growing companies. You can also check with the U.S. Chamber of Commerce to research city, county, and state programs for entrepreneurs, as well as private community development and activist organizations. Both of these government resources can be a great place to find more information about grants and loans for your small business.