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How to Get a Business Grant with Bad Credit
March 12, 2021
How to Get a Business Grant with Bad Credit

How to Get a Business Grant with Bad Credit

If you have bad credit, getting approved for a term loan—or even a credit card—can be immensely frustrating. That’s partially why small business grants are a popular alternative to debt financing.

Still, even grants can be difficult to obtain if you have poor credit history.

Fortunately, though it may take extra legwork, landing a grant despite a poor credit score isn’t unheard of. In fact, some bad credit business grants are specifically designed for business owners in disadvantaged communities, where low credit scores are common. Additionally, there are often many things you can do to improve your credit score while you look for grants.

To help you increase your chances of getting approved for this type of business financing, we’ll review several ways you can work around your bad credit.

6 Ways to Get a Business Grant With Bad Credit:

1. Educate Yourself about the Grant Process

Finding and applying for grants for your business could be a near-full-time job in itself. To get yourself oriented, you should read our Small Business Grants Guide. In this guide, you’ll learn about federal, state, and local grants as well as private small business grants.

You’ll also get useful summaries of small business grants for minorities, women, and veterans. Finally, you can familiarize yourself with some of the less competitive SBA grants which include:

2. Ask a Business Mentor for Help

When it comes to small business grants, the learning curve is fairly steep. The right business mentor can help you skip the learning curve.

If you have a business mentor, ask them for their opinion on seeking out grants. They can help guide your research and confirm that business grants for poor credit are the right choice for you. Or, they can steer you towards a different financing option, such as bad credit business loans.

3. Improve Your Personal and Business Credit Scores

There are probably ways you can improve your personal or business credit score that you haven’t thought of. Here are a few tactics you can use to improve your score:

  • Avoid or limit opening new accounts.
  • Check your credit reports and dispute errors.
  • Use a lower proportion of your available credit.
  • Make all business debt payments on time and in full.

For more info on building your credit, you can find these two helpful articles right here on the Fora Financial blog:

  1. Improve Personal Credit Score, Impact Business Credit Score
  2. Build Business Credit and Improve Your Poor Score

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4. Join the National Association for the Self-Employed

The National Association for the Self-Employed (NAFE) growth grant is an option for any small business owner. The downside of this grant is that it’s only $4000, which is relatively small as business grants go. That said, depending on your business’s maturity, there’s a lot you can do with $4000 to grow your business.

While you do need to be a NASE member to receive this grant, that’s not the worst requirement to fulfill. Membership costs $11.95 per month and includes support from experts on taxes, database management, marketing, and much more.

5. Try Crowdfunding

If you’re still struggling to find a grant with bad credit, you should consider crowdfunding. Similar to grants, when you raise funds with crowdfunding you don’t have to pay anyone back. Instead, you reward the people who funded your initiative with special items or early product releases.

However, crowdfunding is just as—if not more—competitive as getting a grant. The competition is just different. Instead of filling out a long application, with crowdfunding, you create a campaign that offers something in exchange for funds. This “something” is typically special access, or an early product trial, as mentioned earlier.

6. Pay Attention to What Happens in Washington

As of this writing, The American Rescue Plan hasn’t officially passed, but it eventually will. In it, will be another round of funding for small business COVID relief.

According to the U.S. Senate Committee on Small Business and Entrepreneurship, the bill includes:

  • A new $28.6 billion grant program for restaurants and bars
  • An expansion of the Paycheck Protection Program eligibility requirements and additional funding of $7.25 billion
  • $15 billion more for the Economic Injury Disaster Loan (EIDL) Advance Grants Program
  • $1.25 billion in additional funds for the Shuttered venue Operators Grant program
  • $175 million for the Community Navigator pilot program
  • $1.325 billion in administrative funding for the SBA

If you’re unfamiliar with any of these programs, use these resources to learn details about the terms and application process:

Conclusion: Research, Persevere, and Be Ready to Pivot

The unfortunate reality is, you’re probably not going to get a grant in less than 30 days. This makes it important to look at getting a business grant as a long-term play, especially if you have bad credit.

If you have a short time in business, you may have to wait longer to get approved. Often, online lenders and grant providers aren’t keen on providing funds to new business owners. Due to this, you may need to take time to prove yourself. Once your business has been operational over a longer period of time and can prove steady cash flow, you may find it easier to get access to grants.

Ultimately, we suggest taking your time instead of rushing to apply, getting rejected, and burning out.

Before applying, plot your strategy and talk to people knowledgeable about grants. Of course, you should also keep building up your credit score. Then, if you still can’t get approved for a grant, pivot to a different financing option, such as a small business loan, merchant cash advance, or line of credit.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].