You are not alone if you have a bad credit record in South Africa. In fact it is a lot more common than you may have thought and many people who find themselves with a not too favorable financial history are looking to begin a business and needing to borrow the funds to get started. Although it requires some more patience and a bit of research, getting approved to borrow finance in order to begin a new business venture is far from impossible.
You are entitled to one free credit record report per year in South Africa so take advantage of this and it should be your first port of call. The report will give you a clear picture of what a potential credit provider is going to see when you apply for a loan. Also, you may spot a mistake or two on your financial profile so you can have that corrected before approaching a lender and starting with your credit application.
Hiring a financial broker is a good idea if you need to borrow a larger sum of money and although there are of course fees attached to having a broker help you, they often have connections and put you straight in touch with a lender that is able to assist you despite your poor financial past. Start by asking friends and family if they know of or have heard of any good financial brokers in the area of South Africa that you live.
The types of loans available for businesses include funds for starting a small business, funding a franchise or larger sums of cash for building an already existing company.
Interest rates are higher for those that need to borrow money but have a bad credit record as they are considered a higher risk by the lender. Secured loans are the most common way of borrowing money if your financial history looks bad but be careful with this kind of funding as it requires you to sign an agreement that could see you losing a house or your car if your business is unsuccessful
and you fail to pay back what you have borrowed.
The banks are probably not going to help you with finance because of your tarnished financial record so if you cannot find a broker you are going to have to look elsewhere. Local shopping area’s such as main streets and malls often have micro lenders and modest credit providers from which you can borrow smallish loans. This is ideal if you are a new entrepreneur and just need to borrow a small amount of cash to get your business started but not the option if you own a large company or are a franchisee.
Check the classified adverts in your local newspaper as well because there are often small credit providers advertising in the papers.
Also, once again, family and close friends can be approached to help you with finance if you are desperate to borrow. In this case it’s a good idea to present them with your business plan in detail and try to get them to believe in the concept as much as you do. A legal agreement for the loan can be quickly and easily drawn up between both you as the borrower and the person that lends you the money by using the form templates available online.
Cheap Ways to Start Your Own Business
The cheapest ways to start your own business can be debated for hours on end, but the fact is that there are certain idea’s that are much more affordable than others.
Becoming an entrepreneur is an exciting prospect, and there are so many things to consider. For most people, the cost of their endeavour is as important as the endeavour itself. Costs can seem endless and can include advertising, licensing and registration, staff costs, salaries, building and utility bills, and eventually the production of your product. Depending on where your interests lie there are a couple of cheap options worth considering.
Firstly, if you have the internet then one of the most affordable ways to start your own business is online. Going online to start your business is a great way to assess the level of interest in the project you’ve undertaken. If you find that despite placing your adverts in all the right places, you are still not getting the internet hits that you need, then this might indicate that the interest in your business type is not as high as you thought. If however, you receive a great deal of interest in your website then this is a sure fire way to show that your business will have at least a few customers.
Once you have your website set up you can start selling your product online. Whether it is designs, bird feeders or anything in the world there are incredibly easy ways to set up payment methods online. Be careful not to reveal too much information because there are a great number of scams and scammers out there who are really quick to take advantage of people.
There is also the potential to place adverts on your site and earn an additional income for every person who clicks on these ads on your website. It is a well known fact that setting up a website on the World Wide Web is one of the cheapest ways to start your own business.
Whichever method of funding you choose to get a business started or to take an existing one to the next level, make sure that you are punctual with your repayments and stick to the terms in the contract that you sign. This will go a long way in helping you to get back your good credit record and place you in a much stronger position in case you need access to borrow funds from a credit
provider in the future.