How to Get Funding for New Business with Little or No Credit

Here is the dilemma. You have this great business idea that you feel strongly that it will succeed. However, you have no credit and no collateral. What do you do? How can you get much-needed loan so that you can jump start the business? Well, here is some good news. While many lenders may not feel comfortable with giving you money solely on the idea there are some lenders and investors who will base their decision to lend you money largely on the strength of your business idea. If you have cash flow, a great idea, and can prove your concept, you may be able to get the money you need. How? Read on to find out.

Write a Stellar Business Plan

It all starts with a business plan. Writing a good one, however, isn’t easy. If you’ve little or no credit, or bad credit, then you absolutely must spend extra time on the executive summary and management of the company.

When you have no financial assets to back you, your assets must be intellectual in nature – leadership. No bank, and no outside investor, will lend or give money to an unknown with questionable business experience.

The executive summary of your plan outlines your business ideas, what it will take to get them to fruition, and how you plan on making your ideas “stick” in the marketplace.

Doing a good job explaining the strength of your management team will also go a long way toward helping you get the money you need. Make sure that your business plan is complete. A lot of startups do an unbelievably poor job when it comes to creating a plan. They leave out data like projected earnings and even some important costs. You can’t do this.

Get Funding Based On Others’ Credit

If your business partner has great credit, use it. Riding on the coattails of someone with an established credit will not only help your credit, it will help your business get off the ground. It’s simple, and most banks are open and willing to allow cosigners on a loan. Your partner could also assume full responsibility of the loan, depending on how much they trust you and the business’s potential for long-term success.

Get Funding Based On Revenues

You don’t need a traditional loan from a business to get going. According to lending experts at Bad Credit Business Loans (BCBL), business loans for bad credit often come in the form of revenue-based loans. These are more appropriate when you are coming off of a previous venture or you have already established yourself and need credit for expansion.

Revenue-based loans are structured based on gross revenues of the business. Your company deposits money in your company’s bank account. Then, you approach the lender and ask for a loan of up to 10 percent of the revenues on deposit. This is how you start to build credit for larger, unsecured or secured, loans.

Approach Angel Investors

Angel investors, or “angels” as they are called, are special investors that lend money to promising beginners based largely on the strength of business ideas, not credit. Angels do often demand a strong management team, however, and they also want you to be incorporated.

Finally, many angels want to sit on your board of directors, be part owner in the company (but remain a silent partner), and receive a share of the profits for their part in the investment and growth of your business. If you’re OK with this, this is probably one of the best ways to get money when you have no credit or collateral to offer a bank.


Jason Taylor has managed a successful small business for over two decades now. An avid writer, he likes to help those starting out by sharing what has worked for him. You can read his articles on many of today’s top business websites and blogs. See for more information and advice on funding for your small business.

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