Do you want to apply for a small business grant but you are doubtful because of your poor credit rating? Do not fret! Below is a guide on how to get small business grants for people with bad credit.
Having a bad credit report is not the end of the world. Instead, it should be a wake up call for you to take steps in the right direction and seek out ways of improving your credit rating and your business.
Yes, bad credit can be bad for business and even worse for you as the business owner as you always get ‘judged‘ based on your credit rating; especially when it has to do with financial issues. However, running away from the situation won’t let the bad credit disappear; you can’t wish bad credit away.
Your credit report is like an examination score. A lot of people argue that examination is not a true test of knowledge. Same way a bad credit score doesn’t necessarily mean you lack financial management skills. It only means that things didn’t go for your business as planned, which is understandable as there are inherent risks in business which prevents you from achieving set targets.
Well, the banks and credit card agencies do not see it that way. They use your credit score as a tool to gauge your financial credibility and when you have a good credit score, getting loans for your business would be a piece of cake but if you don’t, well let’s just say you will have a tough time convincing standard financial institutions to give you loans and if you are lucky enough to get one, you would be charged a higher interest rate to cover the risks.
However, you can still get loans from other sources to expand your business and improve your credit rating. Recent studies have revealed that more than 75 percent of funds used to set up new businesses come from other sources other than bank loans and credit card funding. This means that only about 25 percent of start-ups rely on conventional bank and credit card loans to fund their businesses. Some alternative sources of getting funding for your business include-:
Alternative Sources of Financing for People with Bad credit
You can consider approaching your relatives or friends for money to help fund your business. Apart from the fact that they would charge you a lower interest, they won’t judge you based on your credit score.
It is also easier to convince family and friends to believe in your business concept or ideas; than it is to convince strangers. You can get loans from your friends and relatives and use it to service your previous loan, so as to improve your credit rating. However, you must ensure that you report timely payments to credit bureaus.
- Micro and Web based lenders
Thanks to the internet. There are now a lot of lenders on the internet who give out loans to business owners. Loan amounts can be as low as $1,000 and as high as $25,000. These agencies do not rely excessively on your credit report to give you loans.
They are a very good source of funding for people who have bad credit reports. They charge up to 12 percent as interest. A good place to start searching for companies that offer such services around you is on this website-www.microenterprisenetworks.org.
- Gifts and Grants
If you are really neck deep in debt and looking for a permanent solution, then you should consider looking for ‘free‘ money that would help to pay your debt and even leave you enough to invest and improve your business.
The US government offers free federal funding to over 20 million people each year and you don’t have to be a poor person to qualify for such funds. Your credit report doesn’t even matter as it is not a criteria used for approval.
You could get as much as $50,000 in government grants depending on your type of business. Some businesses could even get up to millions of dollars if they provide community improvement services. However, qualifying for business government grants is not always a walk over.
How to Source for Legitimate Small Business Grants for People with Bad Credit
When searching for government grants, please be wary of hornswoggle and phony websites out there that offer misleading and dishonest information; designed to rip you off your hard earned money.
The first thing to do is to visit the official government grant page; www.grants.gov and then click on the frequently asked questions page to learn more about the process. You can now make use of the advanced search button to look for grants. You can also customize your search to suit your specific business or industry by using the customize search button. Then go ahead to apply for the grant that best suits you.
You can also obtain legitimate information about government grants on websites like www.sba.gov where you can find information on grants for small businesses. Another place to look is on www.fedmoney.org which provides extensive information about criteria needed to qualify and application process.
How to Apply for Government Grants for People with Bad Credit
The government gives you grants based on a number of factors which include but are not limited to:
- The size of your business.
- Nature of business.
- Reason for application.
- Amount of indebtedness.
- Those who would be responsible for managing the funds i.e. the financial managers.
- How the money would be used.
- How the money would improve your business.
- How the business would affect the community.
- And yea, honesty and sincerity is important.
So, to apply you should -:
- Consider the size of your business and how much you would need to cover for your previous debt and leave you enough to expand your business.
- File an application on behalf of your business, and not as an individual.
- Conduct extensive research on how the system works.
- Register on the website. This takes anywhere from three to five working days.
- Download, fill and submit the application form.
- Track application using user ID and password. You would receive an acceptance letter if you qualify for the grant.
Businesses that offer services that help to improve the lives of people, such as health institutions, educational and research institutions, technological development companies, disaster management companies and security outfits are generally at an advantage when it comes to receiving government grants. It doesn’t mean that other businesses cannot get government grants too.
The government also gives grants for people who want to go to school or to unemployed people; so if you are unemployed and have a bad credit rating, don’t be discouraged from applying for a government grant as you do not necessarily have to own a business to qualify.
- How to Start a Zumba Studio Class Business in 20 Steps - August 4, 2020
- How to Start a Car Title Loan Business in 20 Steps - August 4, 2020
- How to Register and Start a Business in Saskatchewan - August 2, 2020