Compound Profit Blog

We all have dreams and aspirations, and sometimes circumstances can stand in the way of our achieving those goals. For instance, a small business owner wants to finance their business but can't because they have bad credit. So how can they hurdle themselves over this significant financial wall?

The truth of the matter is that there are a variety of factors that can contribute to a credit application being approved or denied. Poor credit isn't grounds for an outright dismissal when you submit a business loan application. Of the 80% of applications that are received, only 50% are declined because of bad credit. It's suggested that you shouldn't even think about submitting an application if your FICO credit score is below 660. A few things you can do to build up your credit are: get your monthly expenses under control, buy a monitoring service and keep an eye on your credit report and score, begin to construct your business credit scores and profile with business credit bureaus as this can be a great help your business and FICO score in the long haul.

Other options available to you are to loan money from family, friends, founders and fools. Family members are usually supportive of you if you have a sound business plan. They want you to succeed. Fools are people you know but aren't intelligent investors, they simply want you to repay them. Crowd funding is another viable option for those who are tech savvy and know how to work a social media room. Crowd funding is where a network of individuals combine money and resources to support the efforts of other people and organizations. One of the wonderful things about crowd funding is that your credit doesn't matter and you don't have to pay back any of the money that you receive.

Alternative financing options to look into are: Equipment Financing, Merchant Account Cash Advance, Checking Account Cash Advance and Factoring. While some of them may check your personal credit, they don't depend on the score so much as a small business loan or standard bank line of credit. Another option is to build corporate credit. Corporate credit affords business owners the chance to receive large sums of money in trade credit with vendors who might not have been so forthcoming had they approached them personally.

You don't have to let bad credit stand in the way of opening your own business. With a little ingenuity and careful searching and time investment, you'll be well on your way to financing your business.