Are you a new company, also known as a startup? Have you discovered that finding funding for a startup is extremely difficult, and that everyone tells you it's impossible?
That's just one person's opinion. Even if you have bad credit, you can get funding for your startup. I'll show you exactly how to do it step by step.
The distinction between personal and business credit
Let's get this party started. So, let's talk about business credit. Many of you are unaware that business and personal credit are not the same thing. When it comes to personal credit, there are three credit bureaus to choose from: Transunion, Equifax, and Experian.
You have what are known as trade lines on your personal credit report. So, if you have a mortgage, an auto loan, or credit cards, they will all appear on your personal credit report, and they will calculate your credit score based on how you use your credit.
It's referred to as credit utilization. Another factor that affects your personal credit is the length of time you've had trade lines, how well you pay your bills, and other similar factors.
But the important thing about personal credit is your debt ratio, and the important thing about personal credit is that you don't have to use it if you concentrate on getting your business.
Business credit
Let us now discuss business credit. Business credit is a completely different story. You still have three credit bureaus. You have Equifax and Experian business, but you also have Dun and Bradstreet.
Dun and Bradstreet is the leading business credit reporting agency. You can create a free profile with Dun and Bradstreet, but it is only for businesses.
The big thing with business credit that makes it much better than personal credit in my opinion is that they care about how well you manage your debt rather than your debt ratio and debt utilization.
So, for example, if you had a $1,000 credit limit on your business credit and used $800 of it, they would not penalize you. They will instead reward you if you pay your bills on time.
Because when it comes to business credit, they are concerned with how well you manage your company. So, if you are a startup, you should go ahead and start the business.
That is, you must name your company and register it with the secretary of state, which means you must form an LLC, a S Corp, or a C Corp. I can't tell you which of those structures is which.
If you need to consult with a tax professional or an attorney, please do so. But make sure you register your business with the secretary of state because it's crucial when it comes to actually running a business.
After that, obtain your EIN, which stands for employer identification number. You can obtain that number for free by visiting irs.gov.
You should also obtain a professional website, a professional phone number, and a professional email address. That is, you want to receive an email that is not abcbusiness @gmail.com.
You'd like to receive an email from noelle@abcproperties.com. In other words, your website and email address should be the same. People will notice that you're a serious business that isn't using a free email account to get started.
This is an excellent way to begin establishing credibility and demonstrating that you are serious about your business, and they will fund it if you do so.
The next thing you should do, even if you have bad personal credit, is open a business checking account. I cannot emphasize how critical it is to open a business checking account.
Even if your credit is poor, you can open a business checking account. If you have bad credit and are having difficulty opening a business checking account. There are numerous banks that can assist you with this.
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Next, you should obtain your Dun and Bradstreet number. This is something you can do for free. Go to dnb.com and register your company there. They will mail you a code after completing a brief process.
You'll have to wait for that code to arrive in the mail. Return to their website, and then create your business profile. They'll offer you something where they try to sell you something to get you a business dnb number but don't do it. Let's keep it up.
Establishing business credit
Now that you've obtained your Dun and Bradstreet rating, it's time to begin building business credit. This will allow you to access a large sum of money for your company.
Allow yourself to begin with vendor credit. Regardless of your credit score, you can obtain vendor credit if you have bad credit. Uline, Grainger, and Quill are a few examples.
These businesses will allow you to create business profiles. You can place orders with them and they will send you invoices. They will either do net 30, net 60, or net 90.
In other words, you can buy their products and not have to pay them for 30, 60, or 90 days. The real advantage is that they report to Dun and Bradstreet.
You can literally use these accounts to start building your business credit while also purchasing items for your business. Once you have established vendor credit, they will begin to report to Dun and Bradstreet, and you can proceed to the next step.
Following vendor credit, you can begin to obtain store credit. There are literally hundreds of stores that will lend to businesses without checking your personal credit score.
Especially if you wait a few months after ordering those Uline, Grainger, or Quill vendor credit lines. Those tradelines will appear on your business credit report, and you will be able to obtain credit cards from retailers such as Walmart, Costco, Dell, and others.
Gasoline companies such as Chevron and Shell are included. They will literally issue business credit cards in your company's name without checking your personal credit. Secured business credit cards are also available.
If you have bad credit and go to your bank to open a business checking account, they will offer you the option of getting a secured business credit card.
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This is where you would take $500, give it to the bank, and they would give you a business credit card. When you use that credit card, make sure you pay on time and ask which credit bureau they report to.
The majority of people will report to Dun & Bradstreet, but some will report to Experian Business or Equifax Business. In any case, you must ensure that they are reporting.
New approach to obtaining business funding for your startup
Last but not least, I'm going to reveal a super-secret new improved way to start getting business funding for your startup right now, even if you have bad credit. Accion is the name of a company. A-C-C-I-O-N is spelled correctly. Check them out.
They are a non-profit organization dedicated to community development. That is, they are only intended to lend to minority-owned businesses, women-owned businesses, and startups like you.
They do not require a particularly high credit score. In fact, they will make loans to businesses with credit scores as low as 500.
Some of these loans have interest rates as low as 525. So, take a look at them. In addition, I'm aware of another company called 5-star processing.
You can go to 5-star processing and get merchant processing and business loans in your company's name even if you have a 300 fico credit score.
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Even if you're a startup, it's an excellent way to begin raising funds for your new venture. So you now know exactly how to obtain business funding, even if you are a startup.
Please leave a comment below and let me know what you're working on. I want to make sure that I'm answering all of your questions about get A Startup Business loans for bad credit, and providing you with all of the information, resources, and tools you need to be successful.
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