Starting Out: Self-funding Your Developer Business
If you are launching a developer business but don’t have great credit or access to a substantial amount of capital, you might be wondering what your options are. One thing to remember is that some of the most successful entrepreneurs in the world have been in this situation. It’s worth trying out various things to get your developer business on the right path rather than simply giving up at the first hurdle. Bad credit certainly doesn’t have to prevent you from achieving your goals.
Let’s take a look at some of the things that you can do if you want to self-fund a developer business.
Can I qualify for a small business loan if I have bad credit?
If you have a low credit score, you may worry that you won’t be able to get a loan. It’s true that UK banks can be hesitant to lend to small businesses. However, you may have the best chance if you speak to your usual bank first. They will know all about your credit history, and banks tend to be more likely to lend to people who are already their customers.
What to consider if you do apply for a small business loan
You may need to use collateral to secure a loan. Collateral can include things like property or inventory. This ensures the lender is protected if you default on a loan. If you can’t provide collateral, you might still be able to get a loan, but you may be charged a higher interest rate. You shouldn’t apply for lots of loans at the same time, as this can have a negative impact on your credit and demonstrate financial instability to lenders.
What can I do if I can’t get a small business loan for my developer business?
Crowdfunding could be an option. With crowdfunding, you can announce the launch of your business and incentivize people to invest in it or provide them with rewards in exchange for financial support.
You could also think about getting a microloan. These loans have become very popular amongst entrepreneurs who can’t get traditional loans or have a bad credit history.
Grants and bursaries
It could also be possible to get funding in the form of a grant or bursary. These are often offered by the government and private sector. You don’t normally need to repay the money.
Ask friends or family members
Have you considered asking friends or family members if they can help you fund your developer business? To incentivize them, you could offer interest or an equity stake in the business.
If you have any valuable special skills, you could use them to get your business off the ground. This enables you to benefit from skills that you’ve already got and can help you gain access to help that you might not yet have funding for by exchanging these skills for help.
Bartering involves exchanging your skills or products for resources that will help you kick-start your business. This is another useful alternative to typical fundraising options, allowing you to benefit from the skills you already have and gain access to services that you may not have adequate funding for. For instance, if you have great sales skills, you could help another business in return for marketing materials.
What can I do to improve my credit score?
There are lots of things to do if you want to improve your credit score to make it easier to get funding in future. One of the first things you need to do is make sure there aren’t any errors bringing your score down, so get a copy of your credit report. If it has any mistakes, you can get in touch with the lender in question or credit reporting agencies to put things right and hopefully put your credit score back up a few points. Make sure your credit report has the right address too.
Make sure you pay your utility bills on time. Missed payments can have a drastic impact on your credit score and cause lenders to doubt that you’re a dependable borrower. You should also get yourself on the electoral roll if you aren’t already, as this can improve your score.
Think about taking out a credit card or loan designed with credit-building in mind. Although these products generally have higher interest and low spending limits, they can be very effective when it comes to improving your credit score.
Saving money for your business
If you do want to get your developer business off the ground but have limited funds, you may need to make some sacrifices when it comes to personal spending. Decide how much of your income you can afford to spend on growing your business and stick to it. Cutting out on things like eating out and subscriptions that you don’t use very often can help you to save funds for your business.
Setting up a business account is also a wise move. It can stop you from mixing your personal cash with your business finances. These accounts also tend to offer useful benefits like accounting software that can give you greater financial transparency and clarity.
Other steps that you can take
There are some other things that you can do when you’re launching a developer business and need to self-fund it. These include taking a part-time job away from your business a few days a week or freelancing. The additional funds generated from this can give your venture more long-term stability.
It is possible to launch a developer business with little money and bad credit, even though it can be challenging. Explore as many alternative funding options as you can, take steps to boost your credit score and save money whenever you have the chance.
You can also use loan comparison tools for people with low credit scores to see what their options are. Using these tools will not affect your credit score, and you could even qualify for a same-day loan approval.