Finding Funding For Your New Business Venture
One of the biggest obstacles to launching a great new business venture is finding the funding to finance that dream. Even in cases where you may have
One of the biggest obstacles to launching a great new business venture is finding the funding to finance that dream. Even in cases where you may have a good credit score, it can be difficult to obtain the backing you need. For those with bad credit but a great idea, the process can be even more daunting. This doesn’t mean all hope is lost.
Funding Your Dream with Good Credit
Those aspiring entrepreneurs who have been able to maintain a good credit score through their lives have the advantage, especially where the individual has equity to offer as collateral. In these circumstances, a traditional business loan from a commercial bank may be your easiest option. The concern there is in determining the interest you’ll be paying and the other restrictions of the loan.
However, even someone with an excellent credit score may choose to go elsewhere and online lending, also known as peer lending, may offer greater incentives. The application process is much faster, getting you approved for up to $500,000 in as little as one business day. Occasionally, the interest rate may be higher, but, if that means getting approved fast, you may accept the added cost. You can always refinance at a later date.
Some budding entrepreneurs may want to consider going through venture capitalists. They typically will invest several million dollars to billions, depending on their belief in the business model. For this reason, they expect you to have excellent credit in addition to a promising idea. You may want to consider this option carefully, because venture capitalists usually want some control in how the business is run in exchange for their sizable investment.
Referring back to the equity you have in a home, you may prefer to tap that instead of seeking out a bank loan. Yes, a home equity line of credit are typically used for improvements on the property, but that doesn’t mean they can’t be used for other purposes. The advantage of using a HELOC is that you’ll have a more flexible payment schedule and a lower interest rate. Pursuing this option can help you get the resources you need and also give you an opportunity to better organize your overall financial management.
Bad Credit Can’t Keep You from Realizing Your Dream
Launching a new business can be especially difficult for those who have a bad credit score. We all make mistakes, but bouncing back from them can take time and plenty of sacrifice. Even so, there are still ways to fund your business venture. Bear in mind that all of your investment capital doesn’t have to come from one place. You may want to consider asking family and friends to loan you what they can as a means of gathering some funding, before pursuing other options. By opening a savings account dedicated specifically to funding your business and depositing that money, you can earn interest as you continue to search for funding.
You may also want to consider a small personal loan. When you are taking the leap with a business in order to make and earn a living you likely are putting a lot or all of your life savings into the dream of being a successful business owner. If you are not looking to take out a business loan for funding and decide to fund the venture with your personal savings you may have a hard time making ends meet personally in the early and pre-profit stages of your company. Consider a personal loan in order to help yourself out without tying up equity or control of your business to a lender. For a personal loan, there are plenty of online lenders willing to give individuals with poor credit a personal loan, though you may have to shop around for the best rates for a bad credit installment loan.
In addition to peer lending, the internet has provided another option for funding a business and this one doesn’t hinge on credit history at all. Many people are turning to crowdfunding as a means of financing their dreams. The idea behind crowdfunding is that people will donate money to your cause, based upon the information you provide about it. While this is a great way to raise money, it also helps you determine how popular your venture is likely to be. You can receive input and thoughts from contributors, which may help you revise or refine your project.
These are just a few ideas to get you moving forward on your new venture. Looking online can be a great way to find alternatives to funding your business, while keeping interest payments at a minimum. As always, shopping around for the best deals can lead to some unexpected new resources and, before you know it, your business venture will be a reality.