Business Start-ups: How To Get Funding With A Bad Credit Rating

The last credit card bill is finally paid and you long for nothing more than getting back on track financially and making a success of your brand new business. But, thanks to your poor credit rating, the banks just won’t lend you the cash you need to get started.

If that sounds like you, check out these useful tips to gain funding even with a bad credit history:


Crowdfunding can be an easy and even fun way to receive money. Sites like Kickstarter and Indiegogo are a great platform to find funding from people who are as enthusiastic about your business idea as you are. You’ll need to offer them something in return for offering up their cash, but this needn’t cost you much from the go – how about offering discount vouchers to spend when your product launches, or an annual/lifetime membership to a magazine you’re releasing?

Personal savings

If you have some money from personal savings, inheritance or redundancy money, why not use it for pursuing your business venture? Any windfall can be helpful in growing your company and you don’t have to answer to anyone about what you are going to do with it. But beware of the potential risks; you might lose everything you put in.

Borrowing from friends and family

Friends and family have known you your whole life and will know whether you can be trusted with money. You might just have made bad decisions and you can explain to them how you plan to handle your money better this time round. They will be more understanding and trusting than a bank and might have the financial means to help you out. However, be sure to compose a written agreement on what happens if you’re struggling to pay the money back to prevent broken relationships should your business idea prove less successful than you’d hoped.

Pay-day loans

This option has to be well calculated and you have to keep the amount within reason. If you have a history of taking out loans and credit cards you knew you couldn’t pay back, steer clear of this option – if you miss a repayment, the fees are phenomenal! However, despite being risky this can be an easy solution for quick funding when you have your finances planned out well and are certain you’ll be able to pay it back on time.

Improve your credit rating

Of course, this isn’t a short-term solution, but there’s no better time to start fixing your credit rating than now, so that a year or two down the line when your business is flourishing you can go back to the banks with an improved credit score and proof your business idea works, and get the loan you need to expand.

Every bank will consult your credit report to make sure you will be able to pay the money back. Unfortunately a bad credit history is not a good first impression and very few banks will loan you money. Finding out the condition of your credit rating can be a good first step to improving it – you can check it online using sites like Experian.

Demonstrate to the banks that you can handle money wisely by taking out another credit card. Make sure that you pay every amount back on time this time round though! This improves your rating and you will soon be able to get your loan.

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