In a perfect world, a business owner would apply for a bank loan or a credit card. However, the business world isn’t ideal and some firms can’t exploit this avenue. They are the companies with bad credit. Sadly, you can’t run away from it as a bad credit score stays with a firm for a very long time. Sure, there are ways to enhance the company’s rating, but they take time. You need money, and you need it fast.
For the entrepreneurs who don’t rate highly, then below are the places to turn.
P2P stands for peer-to-peer lending. In simple terms, a middleman such as p2plenders.co connects a private lender to a person who needs finance. The parties then create a deal which suits everyone involved. Because the lender is a private entity, they don’t need to deal with people who have a fantastic credit history. But, don’t think that the industry is a free for all that full of loan sharks. It’s heavily regulated and the lenders get carefully vetted before the funds get sanctioned.
Home Equity Credit Line
There are ways to deal with a bank without a rigorous credit check. A loan is a sure-fire way to start a full-blown audit, but they aren’t as meticulous with every loan. Take a home equity line of credit as an example. As long as there is enough equity in the property, they are ready to take a calculated gamble. Why? It’s because the house acts as collateral anyway. Of course, everyone should think twice before putting their home on the line as you don’t want to be homeless. However, if the loan doesn’t increase the mortgage payments by a significant amount, it is an option worth considering.
Micro refers to the amount the lenders typically offer. Usually, an entity such as a credit union only provides small to medium-sized loans to its members. For the people who need a significant influx of cash, this isn’t an option. But, for the ones that only need a couple of grand, a credit union could save the day. And, unions aren’t the only microlenders in the industry. On the web, many legitimate companies don’t ask for a flawless credit score as a requirement. It is your job to find them, but entrepreneur.com has a list for anyone who isn’t sure where to start. A tip: zopa.com has an excellent reputation.
Grants And Gifts
Believe it or not, it is possible to secure a grant or a gift that you don’t have to pay back. To help SMEs get off the ground, governments and local authorities offer “free” money to deserving organizations. But, beware of the companies who claim to be able to secure a grant without zero hassle. It’s a lengthy and time-consuming process, even if you have contacts. Let’s face it – people don’t give money away willy-nilly. The best place to start is your local authority’s website.
A business’s credit rating is important, but it isn’t the end of the line. There are options if you know where to look.