Strategies for Supporting Businesses with Bad Credit

Strategies for Supporting Businesses with Bad Credit

By: Kattie Muniz

Running a successful business often requires access to capital and financing, but securing loans or lines of credit from traditional lenders can be an uphill battle for businesses struggling with low credit scores. Poor credit can significantly limit a company’s ability to invest in growth opportunities, purchase inventory, or cover operational expenses.

This challenge can feel demoralizing, but doesn’t have to spell the end for an ambitious entrepreneurial venture. While rebuilding credit should be a long-term goal, savvy business owners can explore alternative strategies to generate revenue and fund their endeavors without relying on traditional financing.

Direct online business

As technology in the internet era has evolved, so has e-commerce. One strategy that has gained traction among entrepreneurs with poor credit is creating direct product funnels on platforms like Amazon.

The concept is simple: identify a product or category in high demand and establish your own “mini-store” on Amazon or a similar platform. By leveraging the platform’s established customer base and logistics infrastructure, you can bypass many of the barriers to launching a traditional e-commerce business from scratch. According to Yaguara, “50% of the units marketed on Amazon are reported to be initiated from third-party sellers. Besides, 22 to 33% of online retailers adopted dropshipping for Amazon as their side gig.”

“Direct online business models have become a game-changer for entrepreneurs,” says Jay Avigdor, President and CEO of Velocity Capital Group. “By tapping into the power of platforms like Amazon, businesses can essentially operate as third-party sellers, sidestepping the need for extensive credit lines or large upfront investments.”

To succeed with this strategy, it’s essential to thoroughly research product trends, competition, and potential profit margins. Identifying a niche with high demand and relatively low saturation can provide a competitive edge by letting you start small and scale gradually, reinvesting profits into inventory and expansion. With a lean operation and minimal overhead, businesses can potentially achieve profitability more rapidly than through traditional brick-and-mortar or e-commerce models.

Affiliate/referral opportunities

Influence and audience engagement have become valuable commodities in social media, and businesses with bad credit can tap into this potential through affiliate and referral opportunities. This strategy involves partnering with digital creators, influencers, or content platforms to promote products or services in exchange for a commission or fee on resulting sales or sign-ups. According to research, “the current global market size of affiliate marketing is over $17 billion. That’s up from $13 billion in 2016. The American affiliate marketing market alone is worth over $6 billion.”

“The affiliate space has exploded in recent years, creating a wealth of opportunities for those willing to put in the effort,” says Avigdor. “Leveraging their existing audience and expertise allows businesses to generate revenue without significant upfront capital or credit.”

The beauty of this approach lies in its flexibility and scalability. From bloggers and vloggers to social media influencers and podcasters, digital creators can seamlessly integrate affiliate promotions into their content through product demonstrations, honest reviews, or engaging storytelling.

Success in this arena hinges on building a loyal and engaged following around a specific niche or area of expertise. By providing value and establishing trust with their audience, content creators can effectively influence purchasing decisions and drive conversions for the products or services they endorse, potentially making passive income. 

Providing expertise as a business

“Building a brand around what you already do best can provide benefits on many fronts,” says Avigdor. “Not only can you generate income by sharing your expertise, but you also have the potential to establish yourself as a thought leader and open up new opportunities.”

The beauty of this approach lies in its low barrier to entry and minimal overhead costs. Whether you’re an experienced marketer, a skilled tradesperson, or a subject matter expert in a particular field, you can package your knowledge and skills into a service or product offering that meets the demands of your target market.

One avenue to explore is offering one-on-one consultations or coaching services. By leveraging your expertise and experience, you can provide personalized guidance and solutions to clients facing specific challenges or seeking to improve their skills, allowing you to command premium rates while maintaining a high level of control over your workload and schedule.

Alternatively, you can develop  educational products like online courses, e-books, or webinars to create comprehensive, high-quality content that imparts your knowledge, letting you reach a broader audience and generate passive income streams. Platforms like Udemy, Skillshare, and Teachable have made it easier than ever to market and distribute digital educational products.

Regardless of the specific path you choose, building a strong personal brand and establishing yourself as a trusted authority in your field is crucial. This can involve creating a robust online presence, networking within your industry, and consistently delivering high-quality work or content that showcases your expertise.

Airbnb Arbitrage

While increasingly competitive, Airbnb arbitrage remains a viable passive income strategy without significant upfront capital or good credit by renting out a property on Airbnb through purchasing an investment property or negotiating a rental agreement. According to Airbnb, hosts earn an average of $13,800 annually across over 7.7 million active listings worldwide.

“Airbnb arbitrage has proven to be a reliable method of generating passive revenue for those willing to put in the effort,” Avigdor notes. “By leveraging the platform’s demand and automating management, businesses can create a steady income stream without traditional credit requirements.”

While careful research into regulations, demand, and property management options is crucial, outsourcing day-to-day operations can streamline the process and ensure consistent guest experiences. Despite potential risks like legal issues and fluctuating demand, the high-leverage passive income potential makes Airbnb arbitrage an attractive option for businesses with limited financing access seeking to rebuild credit in the long term.

“Remember, a lack of traditional financing options is not a death sentence for your entrepreneurial dreams,” Avigdor shares. “By thinking outside the box and leveraging the resources and opportunities available, you can turn your business’s credit challenges into a catalyst for innovation and success.”

Published by: Martin De Juan

Share this article


This article features branded content from a third party. Opinions in this article do not reflect the opinions and beliefs of Voyage New York.