6 ways to raise capital for a startup with bad credit

business credit check

There are few startups that could actually be considered safe credit risks simply because they are just starting out.

If you are launching a new company and have not had time to establish credit, you might need more capital than you had planned for. It doesn’t exactly mean you have bad credit but remember that no credit is just as bad. Few lenders want to take a chance on the unknown, so you just might need to raise a bit of extra capital to get your new company off the ground. Here are six effective ways to raise capital for your startup.

Bad Credit Loans

Although not necessarily “bad credit,” most individuals who are just starting up a business have no credit whatsoever, or they might have bad credit if they’ve had a few failed attempts. This would mean that the business owner’s credit report would typically be run, and if they have less than exemplary credit, they would probably be limited to the types of short termloans they would qualify for.

From bad credit loans to payday loans, if they are still employed whilst starting a new enterprise, there are loans which can help you raise the initial funds you need to get your startup launched. You can check out sites like Bingo Loans who are an online broker, saving you significant time when applying as you don’t need to bother with numerous phone calls in order to get through the process. They can help you find the right short-term loan for your purposes. Just remember, most are due within a couple months, so do plan for that when seeking a loan.

Crowdfunding Campaigns

Launching a crowdfunding campaign on a site like Kickstarter can raise a lot of capital in a relatively short period of time if done right. The problem is, this method isn’t guaranteed to work because there is an art to crowdfunding the right way, and it does involve some additional effort or investment in the form of marketing your campaign. However, this can be achieved using social media and other low to no-costmarketing methods.

Peer-to-Peer Lending Networks

Peer-to-peer lending networks are another option to consider if you’re looking for quick funding. However, be aware that credit, financial stability, revenue, and other metrics will be considered. After all, these lending networks are essentially platforms that connect you with independent private investors. Thus, you will also need a fairly decent business pitch that highlights all of the strengths of your business and outlines how you will be able to pay the loan back in a timely manner.

Angel Investors

In recent years, angel investors have become more and more popular. These are usually business professionals who want to invest in companies with potential instead of dabbling in the markets. Think of them like silent partners who may or may not want to have a say in your businessbut are willing to invest for a share of the profits. This might be a good option if you want to continue paying them back for the duration of your company, unless you sign a contractual agreement that they will be paid in full plus interest by a certain date.

Liquidate Excess Inventory or Unneeded Property

Just because you are a startup doesn’t mean that you don’t have an excess of inventory or unneeded property. Some startups are offshoots of ongoing businesses and, as a result, they bring too much inventory with them when launching a new company. Whether you got ahead of yourself and ordered too much stock or carried too much with you, you can always liquidate assets you won’t need in the near future to keep a positive cash flowgoing.

Monetising Your Web Presence

Every company needs a web presence, and that is by no means a stretch. That is how most consumers or businesses find new companies to deal with and so you willneed to launch a business website. Why not monetise it with ads? It’s one way to bring in money month after month, until your startup has begun bringing in a profit above and beyond operating expenses. Remember, the usual length of time for any new business to realise a profit is about 12 to 24 months, so monetising your site makes sense.

Fixing Your Credit is Always the Best Long-Term Solution

In the end, you can only justify so many short-term loans because they usually need to be repaid within about eight weeks. The interest rates may be higher and you don’t want to pay more than you are bringing in. However, in a pinch,they could be the literal salvation of your business. If you need to continue borrowing, remember that fixing your credit is always the best long-term solution. Keep your bills paid timely, only borrow what is specifically needed, and in time, your company will establish the credit needed to qualify for long-term loans at better rates. Just remember that when you can’t get the conventional loan you need short-termloans are an option to keep you afloat.