What If I Have Bad Credit But Need Cash For My Business?

Online, June 13, 2011 (Newswire.com) - New businesses start up every day - some of them are good and become very successful, while others fall apart in no time at all. But what if you have an idea for a business, a really good idea, but you need to rebuild your credit score so you can get that business start up loan. What can you do? Should you just give up on your dream of owning your own business because you may not qualify for a small business loan? What if you already own your business and just need the money to expand?

First of all, just go ahead and accept that your business is not going to qualify for a traditional bank loan. You will have to wait, if you want to go the traditional route, until your credit score is rebuilt.

If you own your home, you can get some startup funds in the form of a home equity loan. But if your business is a risky startup venture, you'll want to think twice before putting your home on the line.

You might be able to get a business credit card, but it will likely be a secured card with a fairly low line of credit. If you are a business owner trying to rebuild your credit, it's not a bad idea to use a business credit card to re-establish good payment habits with the three major credit bureaus.

Statistically, more business startup and business expansion funds come from friends and family than any other source - as much as 50 percent. Your credit score won't likely matter in this scenario. Your family and friends will likely lend money to you based on your character. But keep in mind that if you borrow money for your business this way, it will do nothing for your credit score.

You may want to consider peer-to-peer lending, where you apply for a loan on a social lending site. You ask for the amount of money you need, and state the highest interest rate you are wiling to pay. Other people who are signed up as lenders will review your profile and loan you a portion or all of the amount you are requesting.

Another option is using supplier and vendor financing, where you use the relationship you have with your suppliers and vendors in order to get the goods and services you need. This is a great way to rebuild your credit, as long as the suppliers and vendors report to the three credit bureaus.