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How to Get a Business Loan with No Credit
Getting a business loan is something that can be challenging even when you have good credit, but it can be very challenging when you have no credit to work with. Still, people with no credit get money every day to start up their businesses. They have to get a little bit creative in how they do things and they might have to use some unconventional measures, as well. If they want to really start their business and get it off the ground, they have to make the sacrifices to get it going. Though not easy, the process is a possibility for people who are smart enough and are willing to work hard enough to make it happen.
Putting together a solid business prospectus
Regardless of your other moves, you will need a good business plan in order to make it work. This is the first step of the process and it is the most important step, too. Business loans, especially for people who want to start a small business, need to have a business plan because the creditors need to know that you are serious about things.
They need to know that you understand the realities associated with running a business because that provides creditors with some insurance. A good business plan includes lots of things, including all of the following:
When putting together a business plan to present to creditors, the more details you can include, the better off you will be. These creditors want to see some reason why it is a good idea to give you a business loan and if the business has a chance to make money, it makes it much more likely that you will honor your end of the bargain. These companies are in the business of limiting risk, so this is a huge concern for them.
Finding a partner to go into the business with you
If you have no credit, then you might need to look for a partner to work with you on the business. Going in alone is tough for lots of reasons and it becomes even tougher when you have no credit history to rely upon. When looking for a partner, you need to keep in mind that this person does have have to be a complete partner.
They do not have to have interest in running the company with you or even investing a full share in the business. They just have to be willing to lend their name in the process and lend their signature. In some cases, you can trade partial ownership in the company for them agreeing to help with the financing.
When you have a partner, the creditors who are considering your business loan application will be able to look at his or her credit score in order to see what they offer. With that being said, you need to choose a partner that offers some or all of the following things:
These things are important because they will become the focus in the loan process. Your lack of history will be less important when your partner has some credit to throw in the mix.
Finding a co-signing party to help
If finding a full partner to go into the loan process is something that you cannot do, then you might want to find a co-signer instead. This has some advantages, because it allows you to do things on your own without having to work with someone else specifically. Still, having a co-signer means that you will have responsibilities that extend beyond your own situation. That person will have some ties to your loan, including the following:
Because of these things, you need to find a person who trusts your ability to pay down the loan at the appropriate time and you need to find someone that has lots of available credit at their disposal. The ideal co-signer would be a person that is not overextended financially and that already has a solid credit history on which you can lean.
Looking outside the traditional financial world
If getting a co-signer or going in with a partner is not what you are looking for, then you will have to consider some alternative measures. That might mean going with a specialized business loan provider that works with people who have bad credit or no credit. In this case, your loan will be more expensive in terms of interest.
Likewise, you could look for a business loan with a family member who is willing to provide it for low interest. Many people in your family are looking for ways to invest their money and they might invest in you, given that your business plan is sound from the beginning.
In closing, you should know that getting a loan with no credit is certainly possible. It will require you to actually think outside the box a bit, but if you are willing to do that, then you can get the money that you need. It all starts with the business plan and from there, you have to go about the business of finding someone to help.
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