You have all the elements you need to get your vision launched except for one: money. You don’t have quite enough capital to fund your venture fully, and the thought of having to scrap it, for the time being, is not pleasant. You know that in time, this has the potential to be a high-performing business. When you finally decide to go through with a business loan, you are shocked when you get denied due to a poor credit score. What can you do besides push your plans to the side for the time being? Take these steps to improve your standing among the lending community.
Write Down a Solid Business Plan
The first thing you can do is get a viable and realistic business plan together. Some lenders use this as one of the factors when evaluating your loan application. Make sure you include things like:
- Financial projections
- Seasonal sales
- Vendor fees
- Inventory pricing
- Projected cash flow
- Research supporting your plan
When sitting opposite a loan officer, make sure you can answer all the questions he or she may ask regarding your plan. These people have experience in this arena, and can usually separate those who wing it and those with a real grounded plan.
Clean Up Credit Issues
If you want to table the idea of getting the business going until your credit score is improved, then start taking the steps necessary to make the number move up a few points. The first thing you should do is obtain a copy of your credit report from each of the three credit bureaus. Next, compare them for incorrect information and creditors. Finally, contact the creditors and make plans to either make payments on closed accounts or pay off unsecured debts like credit cards quicker. The less obligation you have, the better your score will be.
Look for Alternative Financing Options
Patience may not be your virtue, and based on the feedback given on your business plan, you decide you want to get going sooner rather than later. You may be able to find investors who will take the chance and throw some money in the pot. In return, you may negotiate higher payments or giving them a share of the business.
Starting a business with a bad credit score is possible, but it may prove to be more difficult and costly. While outside investors are not necessarily a bad idea, they can wind up costing you in the long run. Instead of jumping into something, consider cleaning up your credit issues and getting the money you need on your terms.