How to Finance Your Small Business With Zero Credit History? Entrepreneurial endeavors costing around $3,000 are already considered microbusinesses by the U.S. Small Business Association. The organization also reports that most home-based franchises fall within the $2,000 to $5,000 range. These figures may not sound like much, but in the right hands, even such a small capital can be properly scaled into medium and large businesses. At the same time, finding the financing for this price range can also be tricky for new entrepreneurs, particularly to those with no credit history. The good news is that in this age of new and disruptive fintech, financing small businesses has never been easier.


Despite initial predictions that the crowdfunding model was merely a passing trend, Kickstarter continues to be a game-changing option for entrepreneurs with radical ideas. In fact, it was the platform that made the first Oculus Rift VR headset possible, a product that has since been at the forefront of the burgeoning multi-industrial virtual reality market, with opportunities in education, training, tourism, and other sectors that can develop use cases for immersive new technologies. Eyeing such opportunities, Facebook later acquired Oculus for more than $2 billion —and it all began as a small but promising project that raised money through the crowdfunding ‘trend.’ If you truly believe in your small business idea, and you have the facts to back up why you think it can be successful, crowdfunding sites can be a great way towards financing whatever you need to get a head start. And because the money will be coming from people who actually believe in your project, it’s also a great way for developing a loyal customer base even before you actually launch the business.

Alternative Credit Cards

In the process of disrupting existing financial institutions, today’s new fintech models and companies are introducing alternatives to traditional credit cards. In comparison to the notoriously complex and arguably predatory credit system in place today, alternative credit cards can provide better financing options for budding entrepreneurs without stellar credit scores. Designed for easy use by people with absolutely no credit history, Petal Card explain how modern credit cards come with zero fees, whether for late payments, foreign transactions, or even annual memberships. Its credit limit is from $500 to $10,000, and even comes with an app for tracking your own credit score, how close you are to your assigned limit, and other factors for better managing your resources. And it’s just one of the different companies you can turn to not just for financing, but also for maintaining an account that won’t be bogged down by traditional fees.

As disruptive new technologies continue to dominate the banking and financing sectors, small businesses increasingly have better access to more flexible and global growth avenues. At the start of 2020, PayPal struck a deal with UnionPay, the Chinese payment card giant. The terms of the deal will allow the company’s UnionPay card to be integrated with PayPal’s wallet, which would allow PayPal users to directly pay Chinese merchants. Furthermore, the Visa network will service PayPal’s new Venmo Card. These new and alternative credit card models are making it increasingly easier to do business with anyone from across the world, even for those who have no credit history at all.

Personal Loans

For this financing option, the key is making sure that you already have a healthy and well-established relationship with whomever you’re asking for funding. While a parent, sibling, best friend, or even distant relative may be willing to loan you what you need for little to no interest, take a step back and examine whether or not your relationship can involve money without turning problematic. If you do have someone in your life who not only has the money, but also trusts you well enough to loan you a significant amount of starting capital, go for it. While loans from friends and relatives may potentially lead to friction, Entrepreneur notes how friends and family only want to see you succeed, which makes them good investors. You can also be more informal and personal about your pitch as to why they should invest in your business idea. With the above-mentioned funding and capital management options in sight, you can better draft a business road map that can convince your close friends and family to hop aboard.

Have An Accounting Plan

Sound accounting and bookkeeping from the start is a great way to avoid increasingly larger problems in the long run. It’s also a great way to start building your credit history. Our post on ‘5 Important Accounting Reports for Your Small-scale Business’ details why income statements and balance sheets must be organized from the start. As an entrepreneur, you should always set your sights towards growth and stability, which entails these proper bookkeeping practices. With great funding comes great paper work, so make it a habit to always balance your books. That was all regarding how to finance your small business with zero credit history!





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