Credit cards · Loans

How difficult will it be for bad credit rated entrepreneurs to get funding?

Manish Kumar Jha Founder

Last updated on September 25th, 2019

If I am having situationally defaulted on my personal Credit Card and Personal Loan Payments and settled the amount with the banks because of very bad financial conditions earlier. ( except willfully defaulting) . Yet I have a powerful idea and I wanna startup. How tough is it going to be to get investments... both from Institutions and incubators/VCs.? Or can I get all company registrations on my family members name whom I trust for the solution of this situation? Kindly advise me.

Paul Garcia marketing exec & business advisor

September 25th, 2019

Hiding your bad credit history is a mistake. If you are discovered to be hiding it, the person doing diligence will terminate your relationship immediately. It will be very difficult for someone who isn't you to claim the idea is theirs, because they will need to interact with the investors in very personal ways. Institutions and investors don't loan money to companies, they loan to individuals. And most are likely to want a personal guarantee beyond the obligations of the business. You won't be able to forget your credit past until the period of reporting is over (typically about 7 years). I'm sorry that you had personal credit issues, but the default is meant to stick with you precisely to warn anyone new that you are higher than average risk, no matter what the reason. it's meant to compare you to other people who didn't default and found a way to pay their bills even if the economics were challenging.

Instead of concentrating on using other people's money, start thinking about how your idea can be implemented using only your own money and being self-sustaining. Is there some small revenue generating component of your idea that you can start with first, that doesn't cost a huge amount, and that can start accumulating some cash as you build up a reserve for funding the larger idea? Is there something else you can do not related to your business idea that could also be a cash generator?

You have to take responsibility for your choices, even when you're not happy about it. But, as a word of encouragement, I can tell you that I know several millionaires who went bankrupt more than once, and yet recovered under their own power to become millionaires again. They did not get help through loaned money. They used their business smarts to take small amounts of their own money and multiply them through personal effort.

Ashit Vora Software Engineer, Working as a consultant for past 9 years, Interested in solving real problems

November 8th, 2019

There will be a due diligence process before even a single penny is given to you. Don't make a mistake of hiding it.

Do you really need money to build that idea?

You can even build a rough prototype and offer the half baked solution to your potential customers and have that as proof.

Manish Kumar Jha Founder

September 25th, 2019

Hi Paul,

Thank you very much for your valuable and precious advise. I am going to take each word of your advice and I completely agree. Yes now, I am going to use own money and will multiply with personal effort. I really appreciate it.

With heartiest regards,

Manish Jha