Poor credit is a common stumbling block for small business owners who are seeking funding. Many banks, and even government agencies like the SBA, require borrowers to have fairly high credit scores. There are funding options available for small business owners with poor credit or little credit history, however. Below, you’ll find six tips for getting funding for your small business no matter what your credit score is.
Six Options for Finding Funding For Your Small Business If You Have Poor Credit
1) Look at CDFIs
Community Development Financial Institutions, CDFIs, are federally certified financial organizations, including banks and lenders, that work specifically with underserved communities that might have difficulty accessing traditional financial services. CDFIs will often lend to people who don’t have the credit scores required to get funded from larger banks and have both grant and loan programs available. Many CDFIs have loan programs available for specific groups, like women-owned businesses or veteran-owned businesses. You can learn more about CDFIS with our post here.
2) Look at fintech funding
Fintech companies, startup or technology companies that offer financial services, will often provide more flexible financing options than brick and mortar banks. We have a partnership with Fundbox, which provides a line of credit of up to $150,000 for small businesses. Loans are also available from PayPal, which accepts credit scores as low as 550 and offers flexible and adjustable loan terms.
3) Apply for grants
Grants don’t always have the same high credit requirements as loans, and of course, do not need to be paid back. Grants can be competitive, but you can read up some tips for strengthening your grant applications here. You can see our full list of grant opportunities to apply for here.
4) Work to improve your credit
Having low credit can be discouraging, but there are ways to improve your credit score such as paying down debt and checking your score consistently. You can learn more about credit score management with our post here.
5) Apply for nonprofit lenders
There are nonprofit organizations whose sole mission is to help small businesses receive the funding they need to survive, even if they don’t have a good credit history. We have a partnership with Kiva, a trusted nonprofit lender that offers 0% interest loans. You can apply for a Kiva loan here. We also have more state-specific nonprofit lenders on our full list, available here.
6) Try Crowdfunding
If you’re unable to get grants and loans from lenders, you could create a crowdfunding campaign to raise funds for your small business yourself. In fact, $500 grants are currently available for small business owners who start campaigns on GoFundMe.
Conclusion: There Are Funding Options for Business Owners With Low Credit
Having a low credit score doesn’t mean that there aren’t funding options available for you as a small business owner. You can receive funding from fintech companies, nonprofits, or even crowdfunding campaigns. You can look through our full list of opportunities to find loans and grants available to you here.
