How to start a business with no money and bad credit scores

start business with no money bad credit

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One of the most common questions asked by aspiring new business owners is how to start a business with no money and bad credit scores.

When your startup is not backed up with financial resources, it can feel like your idea is a giant mountain that you could never climb, especially when you’re flat broke with less than ideal personal credit!

However, if you can see this problem as merely the first of the many obstacles that you’ll encounter as a future founder or small business owner, you can use this as an opportunity to sharpen your entrepreneurial skills.

I won’t lie, it will be difficult, but almost everything that’s worth it is difficult. So, if you truly want your business venture to become a reality, it’s time to tap into your entrepreneurial spirit and make it happen!

The answer isn’t always easy, but there are a few avenues you can explore if you want to start a business with no money and bad credit.

Just remember that even if financing is available, raising money for your business should not be seen as an opportunity to dig you out of personal debt or to make your car payments, for example. When you get funds for your business, you’ll want to manage it so that you can keep your cash flow healthy and you can stay in business.

So are you ready to become an entrepreneur? Then read on for 12 ways to start a business with no money or bad credit:

Here are eight ways to start a business with no money and bad credit:

One: Crowdfunding

Crowdfunding is a viable option to cover your startup costs, if you have no personal funds to invest in your business. Crowdfunding can be used as a way to allow your interested friends and family to help finance your company, and it’s also a way to get access to a much larger prospective investor base.

There are many crowdfunding platforms out there, such as StartEngine and Republic, that can help you raise the money you need to get your business off the ground.

The key to successful crowdfunding is to create a compelling campaign that tells your story and engages potential backers.

You’ll also need to set a realistic funding goal and offer rewards that will incentive people to support your project.

Crowdfunding, and especially equity crowdfunding, takes time and effort, but it can be a great way to get your business started with no money out of your own pocket.

crowdfunding startengine mr wonderful

Two: Bootstrapping

This is my favorite way to get a small business off the ground. Bootstrapping means generating revenue from sales.

The biggest benefit of bootstrapping is that even if other financing options fail, bootstrapping helps you start up with a business model that generates cash flow. Then, whether or not you get outside money, you will still have created a business for yourself, even if it turns into a side hustle. Many businesses start this way.

A second benefit of bootstrapping is that instead of spending your time trying to raise money from other sources, you can use that energy to get your business off the ground. You can still seek to raise money later, but most lenders and investors like to see that your business has traction and building revenue is one way to give them more confidence to invest in you.


Three: Friends and Family

One of the most common ways people to start a business with no money and bad credit is by borrowing money from friends and family members.

This can be a great option if you have a close relationship with someone who’s willing to support your business venture.

However, it’s important to remember that borrowing money from friends and family can put a strain on personal relationships, so be sure to tread carefully.

It’s also a good idea to draw up a contract detailing the terms of the loan, such as repayment schedule and interest rate. This will help to avoid any misunderstandings down the road.

Bonus: If you’re going to try to raise money from Angel Investors or Venture Capitalists at any time down the road, it will help to show that your friends and family believed in you enough to be the first investors in your vision.

Four: Savings

Many new business owners use personal savings to start their businesses. However, If your current cash flow doesn’t allow you to put money up upfront to start your business, you can find ways to build up your personal savings so that you will have the capital and living expenses needed for your business.

This is the time to “white knuckle” it. Cut back on all extra expenses. Eat at home, cancel streaming services, and use the public library instead of purchasing books. Incidentally, did you know that you can borrow library books for free onto apps like Kindle?

While saving for a few months may not give you the cash flow to build a unicorn company, it can help you to have a cushion for living expenses while you get your small business off the ground.

Five: Get a Second Job or Side Hustle

Side Hustle

It may seem like you have no free time, but a second job or a side business may be just the thing to get you the funds needed to start your company. If this feels overwhelming, try to look at a second job as a temporary solution that is simply a means to attain your much-needed cash flow to start your new business.

Six: Apply for Business Grants

There are many different kinds of startup grants available to business owners. The key is to do your research and see if you qualify for any of them.

One great resource for finding business grants is the Small Business Administration’s website. They have a dedicated page that lists all of the different types of grants available to small business owners.

Another option is to search for business grants on Google.

There are many websites that list business grants by state or by categories such as for women business owners and for other under underrepresented founders.

Seven: Get a Home Equity Line

If you’re a homeowner, you may be able to use the equity in your home to finance your business.

Home equity loans and lines of credit are typically available at lower interest rates than other types of loans, making them a more affordable option.

However, this option is only available to those who own their own home and have built up equity.

Furthermore, taking out a home equity loan puts your home at risk if you’re unable to repay the loan.

This is a big decision to make and should not be taken lightly.

Eight: Apply for a Business Loan through the Small Business Administration

The Small Business Administration (SBA) is a government agency that provides support to small businesses.

One of the ways they do this is by guaranteeing business loans from participating lenders.

This means that if you’re unable to repay the loan, the SBA will step in and cover the loss.

This makes business loans through the SBA more attractive to lenders, and as a result, you may be able to get a business loan with bad credit.

To qualify for an SBA-backed business loan, you’ll typically need to have strong personal and business finances.

Read more about SBA Loans and their pros and cons.

Nine: Use an Alternative Lender

If you have bad credit, you may not be able to qualify for a traditional business loan from a bank.

However, there are other lending options available, such as personal loans from alternative lenders.

Personal loans are typically unsecured, which means they don’t require collateral.

This makes them a more risky loan for the lender, but it also means that they’re typically easier to qualify for than business loans. You can even get qualified in minutes, which is enticing but is not without strings.

If you’re considering this option to finance your business, be sure to shop around and compare rates from multiple lenders.

You should also read the fine print carefully and make sure you understand the terms of the loan before signing on the dotted line. Sometimes these loans have low-interest rates but high fees that need to be paid immediately — even on a weekly basis.

Personal loans put you at risk for serious personal financial problems and should only be used for short term financing, and if you are confident that you can pay them back quickly.

Ten: Credit Cards

money, cards, business

Even if you have bad credit, you may be able to use personal or business credit cards to finance your business.

Business credit cards often have higher interest rates than personal credit cards and if you decide to use a business credit card, you’re personally responsible for the debt.

This means that if you can’t make payments, the card issuer can come after your personal assets. Credit cards typically have high interest rates, so you’ll need to be careful not to rack up too much debt.

It’s important to make sure that you can afford the monthly payments and pay off the balance in full each month.

If you feel like you have bad credit because of past problems with credit cards, then be careful with credit card products and personal loans.

Eleven: Build Better Credit

credit card, credit score, mastercard

If you have bad credit, it may be difficult to qualify for a business loan.

One way to overcome this obstacle is to take steps to build your credit.

There are a few ways to do this, such as paying your bills on time, maintaining a good credit utilization ratio, and limiting the number of hard inquiries on your credit report.

Fixing your credit issues will take time, but it can make it easier to get business financing in the future. Use online tools like Credit Karma that can help you to build your credit and suggest credit cards that you will be likely to qualify for.

Twelve: Rethink your Business Strategy

Maybe the business plan that you originally set out with requires more money or credit than you are currently able to secure. The good news is that there are many ways to start a business.

For example, you may not have the capital to build a brick-and-mortar clothing store, but you may be able to create an online business. If you are flexible and adaptable in your business strategy, then you may have what it takes to become a successful entrepreneur!

Can I still get credit cards or personal loans after declaring bankruptcy?

You might be wondering if you can still get credit cards or personal loans after declaring bankruptcy.

The answer is, it depends.

If you have filed for Chapter 7 bankruptcy, all of your unsecured debts will be discharged. This means that you will no longer be legally obligated to repay any debt that is not secured by collateral . However, you will still be responsible for repaying any secured debts, such as a mortgage or car loan.

If you have filed for Chapter 13 bankruptcy, you will be required to repay your debts according to a repayment plan. Once you have completed the repayment plan, any remaining unsecured debt will be discharged.

Either way, bankruptcy will stay on your credit report for seven to 10 years, making it more difficult to obtain new lines of credit. The truth is, it’s going to be difficult to get a traditional credit card from a major issuer.

However, a few credit card options are available for people with bad credit.

Is it a good idea to use credit cards for my business if I already have declared bankruptcy or have bad credit?

If you’ve ever filed Chapter 7, you likely received credit card offers within days of declaring bankruptcy. These offers are generally for high-interest, subprime cards that can end up costing you a lot of money in the long run.

Many business owners have a high tolerance for risk and are willing to take chances on themselves. However, if you have a history of unhealthy behavior with money, you may find help from a program like Business Debtors Anonymous (BDA). BDA helps entrepreneurs to see their financial picture more clearly so that they can live richer lives, “unencumbered by fear, worry, resentment or debt.”


Entrepreneurship is a matter of finding creative solutions to problems. Building up your startup cash reserve is simply one of those problems.

There are many ways to find money for new small business owners to get started, even with no money and bad credit.

There are many ways to find money for new small business owners to get started, even with no money and bad credit.  But with a little creativity and a lot of perseverance, you can make it happen!

For business owners with bad credit, there are still a few financing options available. While each option has its own set of pros and cons, they can all be viable options for business owners in need of working capital.

No matter what route you decide to take, be sure to do your research and put together a solid business plan. With careful planning and execution, you can start a business with no money and bad credit scores.

Read about the 5 Ways to Get More B2B Sales Fast and Venture Capital Advantages and Disadvantages

Check out How Do Angel Investors Work? 


The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific  questions about your business, please consult a licensed attorney or accountant.

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