I have $2k to invest in a commercial franchise, bad credit and no real assets. Are there any loans I can get?
I have $2000 to invest in a commercial franchise, bad credit and no real assets. But I want to know, are there any grants or loans I would qualify for based on the business, so I could make a larger investment?
by Naomi Kokubo, Cofounder of Founders Space
A traditional bank probably won’t loan you the money. Most banks have found credit scores to be the most reliable indicator of whether a loan will be paid back or not, and since you don’t have good credit, you’ll probably be screened out. And I’m not sure about grants. They are hard to come by these day, with the fiscal crisis.
That said, here are some thoughts:
- Friends and family — probably your best bet. This is how most startups get financed, but be careful of ruining relationships if things don’t work out
- Angel investors — if they think your business will take off, they may finance you
- VCs — don’t bother, they won’t invest in your business
- Loan from the seller of the franchise — ask them for a loan at a reasonable interest rate
- Non-bank loan — watch out for loan sharks and shady organizations. Check the contract carefully and make sure the interest payments and fees don’t kill your business
- Micro financing — there are a growing number of micro financing organizations, some of which are non-profits. Be careful, though, some loan sharks masquerade as micro financing
- Community organizations — sometimes a community or city organization can help finance you
- Your church or temple — sometimes a religious organization in which you’re involved will loan money to its members
- Government — there is money out there from the stimulus package that some businesses manage to get. I’m not sure if yours qualifies
- Garage sale — if all else fails, have garage sale. Seriously, you may have enough things to sell to cover the cost
I hope this helps!