Nothing is more frustrating than knowing you have a million dollar idea and not one penny to turn it into a reality. You are ready to change your life—and the world—but no one will offer you funding through traditional channels, all because you have been through some rough times and your credit rating is not that great.
This isn’t an uncommon situation at all. Not all entrepreneurs have glowing credit. In fact, around a third of US citizens have credit scores under 601. You would think that would give lenders some perspective, especially after a recession. Having bad credit doesn’t necessarily mean you aren’t viable—there are many other factors to weigh. Still, many will turn you away without a second thought.
How Are Startups Being Funded Right Now?
In 2015, around 82% of startups had to be self-funded in full or in part. Fewer than half (41%) were able to draw money from loans or lines of credit. Other sources of funding included family and friends, crowdfunding, and venture capital.
Self-funding, networking, crowdfunding, and venture capital are all good and well—but let’s be honest here. Not everyone has access to funding from these sources. You may not have a lot of family and friends who can or will support you. You may have lost money in the recession. And crowdfunding and venture capital are not widely available. Only 3% of 2015 startups were crowdfunded and only 1% used venture capital.
Loans and Lines of Credit for Entrepreneurs with Low Credit Scores
So this leaves loans and lines of credit. Thankfully, both may be more available than you realize—if you know where to look. For example, Capital Match offers simple, fast approval within days for loans, with no hidden fees, early repayment or registration required. You can also choose rates and terms which fit your needs.
Another great option is Kabbage, which allows you to get as much as $150,000 to fund your business if you meet a few basic revenue requirements. You can apply within 10 minutes on your smartphone. Kabbage has no credit score minimum requirement.
It may take some time before you find loans and lines of credit which you qualify for, and in many cases, you already will need to have a start on profiting. Since you are not using your credit score to prove you are a viable investment, you will have to prove it through other means.
Conclusion: Getting Funding For a Startup With Low Credit Isn’t Easy, But It Is Possible
If you have been struggling to get the capital you need to fund your business venture, you may be feeling discouraged when lender after lender turns you away because of your credit score.
But remember, you are far from alone. Around a third of Americans are in the same boat you are when it comes to credit, and plenty of entrepreneurs are in that category. That is why there are now products like Kabbage which are aimed directly at entrepreneurs like you. So check into these lines of credit and alternative lending products. If you do meet the requirements, you could be minutes away from finally securing the funds you need.