Times are tough – especially for those budding entrepreneurs looking to get their business off the ground.  While the state of the economy should never be a deterrent in starting a small business (regardless if the economy is up or down – people and businesses still need to consume goods and services); down economies do have some effect on the business owners ability to find and obtain capital for their ventures.

But, all is not lost if your personal credit is a bit lacking.

Most business owners usually have some types of capital to put into their business – be it from personal savings, retirement accounts or loans from friends and family.  But, they usually do not have all the funds necessary to launch their business and tend to struggle with allocating the money they do have to the numerous start-up expenses they will encounter.

Plus, bad credit (or even no credit) will make it very difficult for business owners to obtain unsecured working capital for items like marketing, payroll, or even office supplies.

I have always believed that whatever liquid capital (cash on hand) a business owners has walking into a new venture should be used for the overall development and growth of the business – it’s essentially like putting in your own venture capital.  However, this method of allocation usually leaves little if not ‘no’ additional money for other items businesses need for their operations to include tools and machinery to provide their goods or services, inventory, rent, or even office equipment including computers, copiers or even vehicles – items used in the day to day life of all businesses.

But, there are other ways that business owners can get these items even if the entrepreneur has bad credit.

For unsecured working capital, business owners can use the numerous social lending sites that have proliferated the Internet over the last decade or so.  Social Lending is essentially where member borrow and lend to each other.  Gaining access to capital for these sources tends to be easier to obtain as you get to tell your story directly to funders.  Further, rates of these types of loans are usually lower than traditional bank lending.  While considered personal loans, the funds received here can be used for any purpose including starting and running your business.

There are also Micro-Credit organizations whose whole purpose is to help new and growing businesses obtain capital after they have been turned down by traditional lenders like banks.  These organizations are typically non-profit groups, backed by the SBA, and understand the trials that business owners face when trying to get their business venture off the ground.  Plus, they offer a plethora of guidance to help ensure your long-term success.

Many new small businesses need all types of equipment for their business – from standard office equipment like computers and copy machines to tools and machinery that allow them to make or provide their products and services.  There are equipment lenders that only provide these types of loans.  They work with new start-ups and are extremely flexible in developing programs that can meet these businesses specific needs and while these loans and leases are secured by collateral (the equipment) there is less emphasis put on personal credit histories.

Further, a start-up business is considered a business in operation under one year.  During this time, many businesses generate financial assets – but still find themselves lacking working capital as they grow.  However, these assets can be used to secure financing, either to speed up the flow of payments, to complete current jobs or orders, or to get the funding needed for payroll or additional marketing.

These capital resources include factoring a business’s receivables (why wait 30, 60 or 90 days to get paid by your customers– when you have bills that need to be paid now) or purchase order financing where your business can receive cash to complete jobs that are already in the works or funds to bid on jobs that would have otherwise eluded your business due to lack of working capital.  And lastly, business cash advances for businesses that accept credit card payments from their customers allowing them to leverage future sales for growth capital today.  The real bonus about there types of financing options is that they are not focused on the business owner’s personal credit history but more on the strength of the asset.

Moreover, given our governments propensity to help people get back to work (most new jobs are created by small businesses) there has been an influx of new government and private grants to help people in need – including business owners.

Lastly, should a business owner still face difficulties due to credit issues – then the only step remaining is to eliminate those issues.  While bankruptcy and credit counseling will continue to harm your credit after you complete these programs, there are other ways like debt consolidation that can reduce your unsecured debt (including credit card debt) into one, low, affordable payment.  Allowing the business owner to free up current cash flow as well as improve their credit scores.

While most lenders tend to weed out potential borrowers through credit profiling – leaving many new business owners in limbo – the resources listed above are design to fill the lending gap that is crippling our nation and geared to help all business owners – regardless of past credit mistakes.

In-depth information about all of these programs can be found on our website – just search for – ‘Business Money Today’ –

Joseph Lizio holds a MBA in Finance and is the founder and owner of Business Money Todaywww.businessmoneytoday.com

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