How To Set Up A Business With No Credit History
/If you’re the sort of person who always pays for things on debit cards and invests wisely, then you might not have much of a credit history. You’ve never borrowed any money, so why would you?
Mostly, it doesn’t matter: you can continue living your life as you always do. But if you want to start a business, it can blow up into a big problem. You might not be able to take out a loan to get you started.
Being in this situation can be extremely frustrating: you have a great idea, but nobody wants to provide you with the finance to make it happen.
However, as we prove in this post, there are ways that you can set up a company with limited or no credit history at all. Check out the following options:
Join A Social Lending Site
Instead of trying to get money through conventional channels, consider joining a social lending site instead. These are where you can borrow money from the rest of the community -- often small sums from individual platform users. You then pay them back the money, plus interest, over time, like a conventional loan.
Because the market sets these lending rates, the APRs you’ll pay are typically lower. Therefore, it can be a cheap option.
Take Out A Hard Money Loan
Hard money loans are loans that you secure on your assets, such as your home. A hard money lender gives you money because they have a form of surety. They’re not just taking a shot in the dark.
These loans are great for people who set up successful businesses because they cost significantly less than loans via conventional channels. Because the risk for the lender is lower, so too is the interest rate.
Get A Grant
Governments and local communities want to foster successful businesses in their areas. The more they have, the more affluent the area will be.
For this reason, there are many grants available for all kinds of purposes. Some of these are to encourage businesses to hire people from the local area, while others are to get them to pursue a particular project or idea. There may also be so-called “green” grants for companies that are embarking on sustainable projects and product development.
Use Equipment Leasing
In some cases, you don’t actually need to go into debt to finance a business with no credit history. Instead, you just need the right equipment.
In the past, you would have had to buy all of this yourself through a purchase agreement. However, these days you can simply lease it and then return it when you no longer need it.
What’s nice about leasing is that it lets you retain your capital and spread the cost of purchases over a long period. What’s more, it allows you to better plan out your cash flow and invest your startup money elsewhere. Once the equipment reaches the end of its life, you simply return it to the leasing company and take out a new contract.
Disclaimer: the content presented in this article is for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.
