Being considered high risk is something that makes setting up and running your own business even harder than it normally would be, and those who are considered high risk usually have to put in a lot more work and make larger amounts of effort than those who are not, in order to ensure that their business is a success. However, if you’ve been told that you’re considered high risk or you know that you have a poor credit score, it’s no reason to throw in the towel and give up on your dreams of becoming a successful entrepreneur.
Entrepreneurs who start off as high-risk and put in all the necessary effort needed to ensure that their business does well are often the most successful, as they have to have a good approach to the hurdles and obstacles that are getting in the way of them achieving their goals. Read on for some tips on how to achieve funding and make your business a success, even if you’re deemed high risk.
Alternatives to Bank Loans
If you’re deemed to be high risk, the vast majority of banks are going to respond with a resounding no when it comes to applying for a loan in order to get your business off the ground. This can be a setback for many new entrepreneurs who are in need of funding in order to get their business started. However, there are some alternatives which you might like to consider.
Firstly, you may be able to fund your business with your own money. Although saving up a large amount of cash in order to fund your business will probably take a lot longer than taking out a loan, it’s an alternative which offers you complete control and will also minimise monthly expenses in the future as you won’t need to pay it back. You may also want to approach an investor, or you could get in touch with a company which specialises in funding small businesses with a more lenient set of requirements.
Look for Lenient Companies
Although many companies that you’ll do dealings with will be quite strict with their requirements and reluctant to do business with those who are seen to be high risk, there are a minority which will give high-risk entrepreneurs and businesses a chance. For example, if you’re looking for a credit card processing company in order to set up a merchant account and accept credit cards as a means of payment from your customers, you should be prepared for some reluctance or even rejections if you’ve got a poor credit score. The best thing for you to do is look for providers which clearly state that they accept high-risk customers – and be upfront about your situation.
Improving Your Credit Score
Making improvements to your credit score will have an effect on the amount of risk that you pose, and also improve your chances of securing funding from banks or investors. Cleaning up your credit score is often no easy task especially if a lot of damage has been done, however you’ll be glad to know that with a lot of hard work it is entirely possible.
Start by paying off any debts that you owe and can afford to clear, as this will change their status on your credit score and work towards improving it. You should also ensure that you make any monthly repayments on time and in full in order to avoid making any further damage to your credit score. If possible, get hold of your credit score report and thoroughly inspect it to see what is causing the most damage and where the repairs need to be made for improvement. You may also find discrepancies or mistakes by looking at your credit score, which you will then be able to rectify. Many people have bad credit scores due to a mistake, which is why it’s always a good idea to check it and see if there’s anything that you need to clear up.
Don’t take out or apply for any more credit if possible. Instead allow your credit score to improve and work on the existing debts that you owe. The amount of credit that you are currently paying back can also affect your credit score and impact your chances of getting either personal or business credit, so the less lines of open credit that you have, the better.
Do you have any advice that you’d like to share with high-risk entrepreneurs? We’d love to hear from you in the comments.