How To Open Your Own Shop With A Bad Financial Background

As we all know, once you’re in the clutches of a bad credit score, Armageddon is impossible to avoid. It’s the end of the world. It’s game over with no more lives left on the screen. At least, that’s what we’re led to believe.

The truth, however, is a little bit different because all is not lost just because of a few bad decisions, a few bits of bad luck and an economy that is struggling. You can even start a business if you so wish; you can even open your own clothes store.

Sure, you’ll find things harder than they would otherwise be and you’ll find your financing options are a little limited, but there are still ways in which you can get that entrepreneurial ship sailing again.

[Photo courtesy of Unsplash]

So, without further ado, here are the things every wannabe entrepreneur with a slightly grey past needs to know:

  1. Don’t Think Banks Are Your Only Option

A big part of the shadow that looms overhead is to do with traditional banks refusing to give anyone with a non-perfect credit score a loan. But don’t worry. Even healthy businesses with five years of good figures will struggle with banks nowadays. Instead, what you should do is look to alternative institutions. That could mean going super niche and looking for small business loans for minorities with bad credit, or it could mean approaching different nonprofits and microlenders, all of whom have a different way of assessing risk compared to traditional banks. In fact, what you’ll find from most of these institutions is they are geared a different way in that they have been set up to help those from low-income backgrounds, or to help female entrepreneurs or minority business people.

  1. Know What Counts

Sure, your credit score is going to be a big factor, but it won’t be the only factor. There are lots of things that lenders like to use in order to weigh up the risk. Essentially, the way a lender will look at your application is using the 5 C’s of credit. Character is all to do with your credit score and history. Capacity is more about your ability to repay any loan. Capital is all about the investments you have made in your business because this will tell them what you have to lose. Collateral is your assets. And last, but by no means least, there are conditions, which is about what you need the loan for and how you will use it. Understand this marking system and you’ll have a better chance of succeeding.

  1. Improve Your Hopes

The first step of securing funding from anywhere is having a rock solid business plan. That’s important. That’s the map that will help an investor or lender understand what you are trying to do and how you will do it. However, that alone won’t do, so also make sure you are actively working to fix your credit score and that you’re hellbent on getting your finances in order. Any steps you can make will impress a lender, and the more you can prove you are serious about it the better your chances.

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