You know how they say change is the only constant thing in life? Well, that might not be completely true. It is also a constant thing in life that “life will surely happen.”
At times, life’s happenings are favourable. At other times, life’s happenings are unfavourable. Sometimes, life’s unpleasant happenings could bring series of events that end up putting a dent on your credit worthiness.
The point is that, while poor financial decisions could bring bad credit worthiness, certain people don’t have to make the worst financial decisions to find themselves in a position of poor credit worthiness. Unfortunately, the world’s financial system is not set up in a way that we can differentiate between those who did and didn’t make bad financial decisions to know who deserves financial assistance for their business.
The reality of things is that you’d simply find it extremely difficult to secure loans with a bad credit.
If you live in a house of your own or have a landed property, then you might just be sleeping on the money you need. Several lenders out there understand the happenings of life. They have systems that could qualify you to get a loan despite bad credit score. They would just require some form of assurance from you.
An asset you own could be that assurance. In this case, asset is anything that you can convert to cash. So in addition to a house and landed properties, automobiles, cash accounts, investments, insurance policies, machinery/equipment among other things count as assets against which you can get loans irrespective of your credit worthiness.
Typically, when you apply for a loan from such lenders, they’ll evaluate your asset to know how much it’s worth. The value of your asset will be a big determinant of the amount of loan you can get. In most cases, that amount will be below the market value your asset.
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When taking this route, you need to have find out what your asset is worth beforehand so you can negotiate the best term. Some lenders will intentionally undervalue your asset just to make you qualify for a lesser amount of loan. But doing your homework beforehand will put you in the know and hence, be able to speak up to get the best deal.
Small Business Lenders
If you have a registered business, then you might be able to secure loans from small business lenders. Most of them came into business after noticing the limitations of the traditional financial system. They are here to make it easier for small businesses to gain access to financing.
You would need to do your own research to find out what they require. In general, though, small business lenders could offer loans against assets, cash flow, future cash flow, receivables and so on.
Cooperatives are independent associations that are formed to help members meeting mutual economic cultural and social needs. Cooperatives are run democratically by members of the associations.
The advantages of getting a loan through a cooperative include, but not limited to low interest rates, and flexible repayment plans.
In fact, most cooperatives are set up in a way that you’d earn bonuses even if you borrow because they usually share profit among members, which you have to be before you can even qualify for a loan. Typically, you’d join the cooperative society and save money with them consistently for a number of months – usually six months. After a probationary period, you will be able to borrow up to double your savings.
Related: 5 Small Business Loan Ideas
Friends and Family
Statistics have it that more than 50% of business owners get funding help from friends and families at some point in time. What this means is that your friends and families could be willing to help you get your business in motion more than you think they were.
And if any class of people would care less about your credit worthiness – or the lack thereof –, it would be your friends and families. All you just need to do is ask. The worst-case scenario would be to get a NO.
To increase your chances of securing financing from friends and relatives, you should consider offering them something in return. Don’t tell them to give you money or just borrow you money. Ask them to invest, which means they’d expect something back in addition to their capital. Don’t be greedy about this. Always bear in mind that 1% of a $1 million company is better than 100% of none.