Is it possible to start a business when you have personal bad credit? The consensus after researching this question is, yes! There are so many persons who are afraid to start a business based on their personal credit history. Please do not let this be a deterrent.
While it won’t be easy, it is possible to get approved for business funding mostly through the use of alternative programs. Bank loans, Small Business Administration loans (SBA) and other more traditional lending sources may prove to be more difficult, however, not totally impossible to secure.
One of the things you want to do is to separate your personal credit from your business credit. Look for those lenders who are willing to extend credit based on your business credit score and not your personal credit score.
If your personal credit is less than ideal, using it to apply for a business loan or business line of credit may damage your chances of getting approval. In addition, it is not good practice to mix the two just in case the business proves to be unsuccessful. If your business goes into bankruptcy, your personal assets, finances and other property may become a target. While pursuing funding, It is very important that you continue to work on your personal credit any improvement in this area will be helpful towards securing a loan.
Online magazine, “Entrepreneur” speaks about the subject in their article entitled, “Funding Options for Bad Credit Risks”. Click on the link to read the article. http://www.entrepreneur.com/article/166076
The best way to keep your personal credit history from being used against you when applying for business funding as well as; protecting your personal property, any assets and finances that you personally own from a lawsuit against your business, is to immediately establish your business as a Limited Liability Company, (LLC). “BizFilings”, an online website, wrote a detailed article speaking about this very subject. They also for a fee, will walk you through the process of becoming incorporated. For more information click on the link below: http://www.bizfilings.com/learn/small-business-credit.aspx
Rejection is a normal occurrence when applying for any kind of loan. You can expect to be rejected several or more times before finding someone who will give you an opportunity. The key is to not give up. There are many types of business loans that are out there and numerous lenders. Keep trying! All you need is one person to say yes!
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