You can’t start and grow a thriving small business without capital. However, this can be difficult to come by if you have weak credit. It’s challenging to find someone willing to take a risk and loan you money in these circumstances.
It’s important to be honest with yourself about your degree of financial responsibility if you’re seeking money to start a business. If you’re still at risk of falling into the same financial habits that negatively impacted your credit in the first place, you might not be ready to take a risk on a business idea until you’re more financially secure.
That said, there are reasons your credit may be weak that are unrelated to poor financial choices on your own part. You also may have simply learned how to manage your finances more responsibly by now.
If so, you don’t have to give up on your dreams of being an entrepreneur if you are struggling to generate startup capital through traditional means. There are other options to consider. For example, you could take out a car title loan.
Although you should research this topic in greater detail to confirm this option is right for you, there are several potential benefits of funding a business this way. They include:
A title loan can be a good source of funding for your business even if you do have relatively good credit. The time it takes to process a loan application can still be longer than you wish it to be regardless of your credit score.
When you apply for a title loan, a lender typically won’t perform a credit check, as you’re simply putting up your vehicle as collateral. This allows lenders to process an application much more quickly.
Continued Use of Your Vehicle
You may wonder if taking out a car title loan involves forfeiting the right to use your vehicle until the loan is fully repaid. This is a common concern.
Luckily, it’s not something you need to worry about. When you take out a car title loan, you almost always are allowed to continue using your car, even though you’ve essentially given the title of the vehicle to a lender.
Again, it is critical that you look into the limitations of a car title loan when deciding to fund your business with one. This option isn’t ideal for everyone. No lending option is universally ideal.
However, many business owners find that taking out car title loans can be helpful when they need fast cash to address urgent issues. For example, maybe you forgot to pay an invoice and you’re at risk of losing a vendor as a result. This can devastate a new business. If you know you’ll have the funds to pay them in a few days or weeks, but they’re demanding payment now, you can preserve the relationship by taking out a title loan to pay the invoice. Just make sure you’re thoroughly confident you’ll have the funds to pay back the loan on time as well!
These are just a few potential benefits of funding a business with a car title loan. Look into this option when your business is strapped for cash to better determine if it’s an option you should consider. In some scenarios, a title loan can offer major advantages and few drawbacks to a small business owner.
Jenna Cyprus is a freelance writer from Renton, WA who is particularly interested in travel, nature, and parenting. Follow her on Twitter.
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