Starting a business is definitely intimidating especially if you’ve given up hope because of your credit score. Your score doesn’t need to define your future, though. You still have options. You can look into home equity loans, self-fund, or look for a loan from family or friends. You can build a successful business despite your terrible credit.
Look into Home Equity Loans
You can use your home as collateral for a loan. This is a type of second mortgage on a home. In a home equity loan, according to PSECU, your home will be used as collateral if the borrower defaults. This can be risky and you need to do it with care, but if you are confident that your business will succeed and you’ll be able to make all your loan payments, then you should consider this option for starting your business. However, keep in mind that your home will be on the line.
Self-funding your business venture isn’t an option for everyone, but if you have the ability to fund yourself, then you should choose this option. According to Franchise Gator, you can use an existing 401(k) plan to fund your business venture without paying penalties or taxes. This will allow you to keep control of your business and improve your entrepreneurial skills. This is the best option for those who are able to afford self-funding because it keeps you debt free and you won’t have to worry about loan payments.
Look for a Loan from Family or Friends
This is an option that many people may not want to even consider. However, if you have terrible credit and you’ve exhausted every other option, you might want to talk to your family and friends and see if they would be willing to lend you the money. Chances are, they want to see you succeed and will help you turn your business dreams into a reality. You just need to make sure not to take advantage of their generosity and make sure to pay them back regularly.
Starting a business can be a little scary, especially if you don’t think you can do it because of your bad credit score. However, there are definitely options if you find yourself in this situation. You can look into home equity loans, self-fund, or look for a loan from family or friends. Once your business has started, you can start to rebuild your credit.
Read this next: Why Your Business Needs to Focus More Attention Online