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One of the questions we hear a lot at Bamboo is: can I get small business funding with bad credit? So, this week, we thought we’d break it down.
It’s a cliche, but it’s true: starting a business is an absolute rollercoaster. Your first few years are going to be a mix of exhilarating highs and scary lows. You’re going to pump your fists in celebration and think “oh no, this is the end”.
But, after a while, things settle down and you realise you’ve built something that you can be immensely proud of. You’ve taken an awesome idea and through sheer force of will, determination and hard work, made it into a profitable business.
And that deserves a big Bamboo high five!
The only problem is: what if you need some money to take your awesome idea and see it through? On top of that, what if you’ve got bad credit?
Can you get small business funding with bad credit?
We’re not going to lie to you, finding small business funding with bad credit can be tricky.
In fact, even the business funding backed by the Government to help small businesses states that ‘your application will be assessed individually based on the information you provide, a credit check obtained from a Credit Reference Agency and our internal credit policy.’
But nothing about starting a business is easy, so if you’ve got the determination and dedication, there are options for you.
As with lots of lending nowadays, banks and traditional lenders are very unlikely to give you a hand if you’ve got a poor credit score.
Of course, if you’ve got a house to put up as collateral, then you might be in a better position, but considering the volatility of new businesses, this is a decision that you shouldn’t take lightly.
There are, however, options for small business funding with bad credit…
Option 1: Small business grants
Small business grants are the creme de la creme of business funding for two reasons: not only do they not rely on your credit score, but they also don’t need paying back.
They’re the perfect way to get the cash injection you need to take your business to the next level.
However, for obvious reasons, getting accepted for a grant isn’t easy. Not only are the criteria often really strict, but there’s lots of competition for each grant, making it unlikely that your business will luck out.
However, definitely apply for any grants that you qualify for! (You never know…) Just don’t put all your eggs in the grant basket.
Option 2: Specialist small business funding with bad credit providers
You’ll have to do some digging, but there are some lenders that are willing to help small businesses get funding, even if you’ve got poor credit.
Be careful. It’s easy to get excited by the prospect of funding and miss a clause in the contract or high interest rate that could come back to bite you and damage your business.
Option 3: Friends and family
Borrowing from friends and family can be a bit of a minefield, and that minefield only gets more dangerous when it involves business.
However, if you have a family member who wants to help you in the early days, that can be a huge bonus.
If you’re going to ask friends and family for help, make sure you give them the full picture. Explain how much you anticipate to earn and be honest with them about when you expect to repay them. The last thing you need when starting a new business is the stress and/or guilt of leaving a family member out of pocket when they need the money.
Option 4: A personal loan
Of course, you can apply for a personal loan that you can use towards your business. (In fact, business is listed as a reason for application during our application process.)
Not to mention, guarantor loans can be a great way for your family to help you start your business, without having to cough up any money. By simply vouching for you and your fiscal responsibility, they can help you borrow up to £8,000 to put towards turning your awesome idea into a reality.
- Author The Bamboo Team
- Posted 24 June 2019