Do you need fund to start a business but no one will lend you due to bad personal credit? If YES, here are 20 alternative ways to raise money with bad credit.
Anticipating the prospects and success of a business idea can be really exciting indeed, but the thoughts of how to raise capital especially when you have bad credit can pose a serious challenge. Luckily, there are numerous proven ways that work, which other business owners like you have been able to use to raise capital for a successful business startup. Here are twenty ways you can raise money for your business.
Start a Business With Bad Credit – 20 Unusual Sources of Fund
- Self finance
You can start your business with what you have, depending on what you have been able to save up over time. This will work depending on how much you have projected in your budget, your business plan and the type of business you are venturing into. The business should be seen as your baby, and you are expected you show a level of commitment by sacrificing reasonably.
- Sell extra items
We all have those extra items at home lying around, occupying space. Selling them off would help raise business capital without much stress. This gives you much more rest of mind compared to getting a loan, which will obviously add to the already existing bad debt. One way to go about it is to make flyers of simple paper prints advertising your chosen date for a yard sale. When you do this properly, you would be amazed at how much you would rake in.
- Let out space
Sharing your space in the form of a rent to another business minded person like yourself could also help you raise fund. This is an alternative way to raise capital for your business start up and keep the business alive for as long as possible. You will also enjoy the benefit of sharing maintenance cost like electricity bill and other utilities available to both parties.
With proper strategy, planning and mapping out of how much working space you need to yourself and how much you can let out, you will do the trick. You don’t have to inconvenience your own productivity while doing this.
- Start part time
Another alternative that can help you raise business capital when you have bad credit is to keep your day job or get a day job, while you let your business run on part time. Proper planning of time and resources or man power helps to make this idea work.
You should be able to draw up a budget on personal expenses that will allow you keep extra funds for the business. If it is possible to do two jobs just to make it work, then do it. A friend was able to earn and save up hundreds of thousands using this method.
- Family help
Business capital can be raised internally within your family and very quietly too. It can be borrowed and it can also come as support at no extra charge. Take advantage of the bond, let your family members see the prospect and the passion you have for the success of the business.
Talk to as many family members as are capable of and see how far you go. You might be lucky to get a major sponsor within your family, which will take your focus away from raising funds to directing all your energy and mental power to making profit business wise.
- Help from friends
Sometimes we have friends who would do for us the things family members might not have the power to do. It all depends on the relationship. This can be a very effective alternative, especially when you have been good friends and when the going was good to the point that your friends owe you a favor. Your financially capable friends can give you a loan, or better still your group of friends could donate and contribute funds for your business plan. All you need do is convince them of what they stand to gain from it.
- Exchange service
The idea of service exchange works on several levels. One way it can work for you is to offer a service your business can render, or a personal service you can render in exchange for a service that your business needs to work. This can cut off payments you would have made if you were to pay directly to get a hand for this service.
It means that aspect is taken care of for good depending on the service you can offer. An example here could be a courier business exchanging services with a telecom business. Once an agreement can be reached and the paper work is intact, everything should work out smoothly.
- Win a game show
It is very possible to prepare well for a game show like the ‘who wants to be a millionaire” game show. You only need to answer questions up to a certain level which determines how much you take home. If you play well, this is an alternative way to raise money to start your business, especially when you have bad credit. There are different game shows you can enter depending on your country. Some of these game shows let you play for millions, which will surely go a very long way.
- Win a contest
Another way you can raise funds is to enter a contest targeted at helping new business ideas. Some of these contests require that you develop a GO green campaign or renewable product that doesn’t pollute planet earth or a software for modern age technology, depending on the sponsors of the contest. It could even be just a business plan.
Advert of such contests appear on social media from time to time. Companies like Microsoft and several finance companies sponsor these contests depending on your country.
- Apply to a fund program
A couple of finance institutes provide the opportunity for those with profitable business ideas to apply for startup capital. Usually, they mentor and provide support to businesses, making sure the business thrives. Some of them allow a reasonable number of years for your business to make reasonable profit, before you begin your payback, depending on the initial agreement.
This is also a chance for new business owners to learn the ropes, without having to make avoidable mistakes from wrong decisions. To do this, you must submit a business plan and other documents that may be required of you. Often you will be interviewed with an inspection to your site location. When every requirement is met, funds will be made available to you.
- Crowd funding
In case you haven’t heard of this idea, it is a new way business owners are raising funds to start business and it works. Crowd funding entails getting several interested financiers to give you a loan. It is like a two in one package, where your product or business is marketed and advertised to several people, they get to patronize you and provide the funds for what needs to be done.
You can achieve this by creating a crowd funding platform or you join one. Although crowd funding is challenging, it requires you to pitch a business idea that is catchy enough to get people interested in your vision. One other advantage of crowd funding is that you get to know how attractive your business idea is to others.
- Online source
The internet is a global market place as we rightly know. Transactions of various dimensions occur per second online, including getting an international investor or groups of investors and online fundraisers. You can surely raise capital for your business online when you have bad credit.
The good thing is, it is the world available to you. Billions of people among which are potential investors and business partners, get to see your appeal for business capital. Keep your hopes high as your investor could come from any part of the world, as long as they pick good interest in your business plan.
You could get yourself business partners. The question now would be, how many partners do you need to raise the amount of money you need to start your business? The financial responsibility could be divided into percentages or equally depending on the agreement. If it is possible to use a shareholding concept, then it will indeed be very nice. Partnering with others might mean they would be active or passive partners, whichever one you feel is appropriate.
- Micro finance banks
Micro finance banks are available especially to finance small scale and new businesses. Don’t hesitate to approach a micro finance institution close to you to discuss how you can secure a loan. Percentages on loans offered by micro finance banks might be workable and suitable for you. If you are really high on bad credit you need to have a serious plan which must be very realistic because getting into more bad debt is bad for business.
- Federal government funding
The Federal government campaigns to increase the number of small scale businesses over the years has increased greatly. The growth of this sector adds tremendously to the growth of the economy and the provision of jobs. The federal government allocates huge sums for businesses that have challenges raising business capital.
This is one opportunity you can always tap into. Simply apply for your business capital by letting government officials in charge see your business plan and idea. Once you are able to convince them, it is done. Federal government funding comes with a fair interest rate.
- Co-operative society loan
Obtaining a loan from a cooperative society is also a possibility. All you might need to do is to either join by registering and making a few contributions, or follow the necessary process the cooperative society you intend to approach uses. After making contributions for a short while, this qualifies you for a loan as a member of the group. Cooperative groups usually contain business owners like yourself who started following the steps you are about to follow.
- State government funding
Should it be the case that getting your startup capital at the federal level doesn’t succeed, it is also wise that you pursue links that would give you the funds you need at the state level. The state government is usually in partner with mega financial houses even at international level to finance new business ideas. You would need to apply and submit your business proposal and any other document to support your intention. Once your business idea is convincing enough, you are good to go.
- Bank loan
Banks are always there to issue out loans to their customers as long as you have collateral. In the case where you have collateral that is not connected to the bad credit you might have already, then you should approach your bank for a loan. Having a payback plan is very important before taking this step.
- Get a Capital investor
Capital investors are always willing and searching for meaningful businesses to invest in. You can take up the option of engaging a trusted capital investor. Reveal your plan and how it should work out, discuss terms with the investor then seek legal advice if need be. Capital investors invest a lot in businesses that have proven to be of great potential. If you pitch your business idea the right way, you just might bag yourself a good capital investor that will help you achieve your dream.
- Product sales
You can also sell products before your business launch. The idea here is to offer the need people can pay for, get money in exchange, when it accumulates enough, then you can have your big business launch. You should be able to sell products to friends and families easily and also make deals that would help you make sales in your environment.