There are a few basic things that any entrepreneur needs to start a new business, like time, lots of hard work and commitment, to name a few. Another universal need that shouldn’t be overlooked is money.
To get the funds necessary to keep your business moving forward, you’ll more than likely need to secure a loan. However, there are many obstacles that could get in your way of obtaining the all-important cash you need.
Here are a couple common ones and what you can do to overcome them:
Your credit is too low
When you apply for a business loan, your lender will check your personal credit report to make sure you’re a trustworthy borrower with a track record of paying bills on time and not carrying more debt than you can handle, Business News Daily pointed out.
If your credit score is too low, however, the lender may decide you’re too much of a lending risk. Maybe this is an accurate assessment, and maybe it’s not; in any case, you’ll need to find a way around this barrier.
For the long term, you can work on building up credit so you’re more eligible for funding later on. Start by paying your bills on time and getting rid of any outstanding debt.
For the short term, try seeking financing elsewhere. Alternative lenders typically are more lenient for low-credit customers because they understand there’s more to the story aside from the three digits of your credit score.
You don’t have enough industry experience
Banks generally like to see at least five years of successful industry experience before lending an entrepreneur money, Business News Daily explained. Of course, it’s hard to get this experience without growing your business, and it’s hard to grow your business without money!
If you’re opening a company in an industry you personally have years of experience in, this may help, such as if you’re an accountant opening your own independent firm. Also, having a solid business plan drawn up never hurts. This can show how, exactly, you’ll make money.
Lack of experience is another obstacle that an alternative lender may be able to help overcome. National Funding only requires one year of experience before loaning money to an entrepreneur.