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With the current state of the economy, personal bad credit seems to be one of the hurdles facing entrepreneurs. Starting a home business
is one of the best opportunity for building wealth. The two challenges most people have are - Fear and they don't believe they know how. Yet the sooner you
get started, the better off you are. Bad credit among home business entrepreneurs is more common than you think and can make the startup process slightly more difficult, but is not a total barrier to entry. Especially if you don't try doing the business by yourself and find a partner.
The primary complication of launching a business with bad personal credit is funding the business. Banks rarely finance home business and bad credit will make it even that more difficult to obtain a bank loan for your business. Same with the SBA loan guarantees -- because the SBA programs rely on you qualifying for a bank loan, good credit is requirement in many cases.
But don't worry! Most businesses are launched without bank loans, and if you really want to start you business, you will find a way to finance your idea.
When using a low cost of entry personal franchise or direct selling company to start you business, many of the major credit hurdles of starting a business are over come. There is no need for personal credit to secure products or services, merchant services, or other typical items you would need because the corporation that you represent will cover all of those concerns.
Some possible lender to consider -
Social Lending - There are a number of social loan sites that lessen the paperwork hassles attached to applying for a small business loan at a traditional bank. They match people who have money with people that need money.
Self Funding through a Partner - Take a set amount of money (You and Partners) and place the funds in a separate checking account. At the same time you might want to consider getting a credit card that links to that account.
Sell Assets -Asset sales to relatives or friends can offer a neat and relatively simple alternative. A creative method might even be placing assets into the company and your company sells one or more assets (which could run the gamut from computer equipment to real estate) to someone you know and trust; he or she then leases those assets back to the business at a price that seems fair to both of you. Your friend gets the tax deduction and regular income stream; your company gets a onetime infusion of capital and, presumably, better leasing terms than it would have received if it had been dealing with an independent financier. Best of all, your capital structure remains clean.
Micro loans - These loans typically range in size from hundreds of dollars to the low six figures. They make so much sense for start-ups and struggling small companies that it's practically un-American to say anything bad about them. Reports from the field suggest that microlending activity is slowing down though. "Microlenders have been bailing out on us left and right," is the blunt assessment of Hedy Ratner, copresident of the Women's Business Development Center, in Chicago.
Merchant Account - If your business can be conducted over the internet, you can also obtain a Paypal account without a credit check...they accept both major credit cards and checking account drafts and their rates are usually better than the high-risk merchant services. Being flexible can overcome many of the issues associated with less than perfect credit.
Don't let negative credit stop you from pursuing your dream of starting a business. While some things may be more difficult, there is no hard and fast rule that bad credit means you can't succeed in your own business. If anything, it will force you to be more conscientious about how you spend your startup capital and keep
you focused on building your business with an eye on profitability.
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