8 Options for Small Business Start-Up Loans

Business finance confuses most – and with good reason – it’s especially tricky when you’re just trying to start your business up. Unfortunately, most new businesses need help with finance and that usually comes in the form of a small business start-up loan. These loans help get a business off the ground or at least help buy the most important things, such as supplies, vital equipment, and machinery. So, what funding options are available, and which is right for you?

Top Small Business Start-Up Loan Options to Consider

  1. A Business Credit Card
  2. Equipment Loans
  3. An SBA Loan
  4. Non-Profit Microlenders
  5. A Microloan from the SBA
  6. Crowdfunding
  7. Invoice Financing
  8. Funding from Family and Personal Sources

Start-up business loans do come in many forms and can be extremely useful if you have a lack of funds available. Fortunately, there are a host of finance options. The above are just a handful of loan options to consider but there are many more.

Create A Crowdfunding Portal for Raising Capital

A lot of people donate money on crowdfunding pages simply because they believe it’s a good cause. It can be a smart idea to look into crowdfunding as there are thousands interested in investing (a small amount) in new business ventures. However, this is more of a donation rather than an investment as those giving money through crowdfunding don’t receive any money back or a stake in the business. This is a great business finance option to consider and can be useful at raising capital; just ensure you lay out the reason for asking for donations. Check here!

Instead of Business Loans, opt for a Business Credit Card

While business finance comes in many forms, one of the most popular choices is the business credit card. Of course, this isn’t suitable for every start-up but can be a useful option, nonetheless. However, there will be a limit on the amount of credit you can put on the card, so you must watch your spending as it needs to be paid back. A credit card may also come with a higher interest rate, so you need to investigate the ups and downs of the card.

Funding from Family and Personal Resources

While traditional finance options remain open to you, there are lots of simpler forms of funding available. One of the top options remain personal resources. This is especially useful if you have personal funds, such as savings, available. Of course, you have to use this money wisely and have a business plan so that you don’t waste the money. You could also look at asking for a personal loan from family members or friends. Most people don’t request interest on personal business loans to friends, of course, this will depend on your contract.

Choose a Loan Wisely

Start-up loans are important for most new businesses. Unfortunately, many business owners don’t think about finance before they launch theirs and that’s a mistake. You need to know what finances available so that you can take the best step for your business. Start-up loans are useful and can be used in many ways. Choosing the right business finance option is crucial, so look at all avenues before you decide which is best. For more details read our article: https://www.mainstreetlvnm.org/what-do-banks-look-at-for-loans/

What do banks look at for loans?

Small business owners usually do not turn to banks when seeking for loans. Maybe because they do not know what it entails. There are so many reasons entrepreneurs may decide to apply for bank loans.

Some of the reasons may include; business expansion, small business and a myriad of other reasons which are taken into due considerations by banks. But the question, how do you convince a bank to give you a loan for business/personal needs arises and immediately people are crippled with fear.

The truth is, getting business loans from the bank is not usually an easy task, especially for small business owners. In this post we’ll give details of what a typical bank will expect from a loan applicant.

Here are common requirements that are customarily asked for by most banks.

·        Purpose of the Loan

As opposed to regular money lenders, the purpose for the loan is very important to banks. The purpose for soliciting for bank loans should be written in details. It gives the bank a sense of security and they don’t feel blindsided.

To gain their trust, make sure your loan purpose is clearly written and is comprehensible. If the bank cannot understand the purpose of loan, your application maybe seen as sketchy. Hence, depriving your application of their approval.

·        Credit history

Typically, banks would want to review both the credit history of you as an individual, and that of your business. Banks want to know that you are prudent with funds and that is why they request for personal credit history.

Before submitting credit history to your bank, ensure that you have personally reviewed it. In reviewing it, you find mistakes and make corrections. This put you steps ahead of whoever reviews your credit history. Check here!

·        Cash flow history

This is required by banks to check the amount of money coming into a business and the amount of money going out. Positive cash flow increases your chances of qualify for a bank loan.

Banks need your cash flow to make financial projections for your business. They want to be sure that when it is time to repay the loan, you would be able. If they find your cash flow history lacking, you are less likely to qualify for the loan.

·        Collateral available to secure loan

Collaterals are an additional form of security for banks. Collateral ensures that a bank will be repaid in full in case of a business default. Collaterals are usually an equivalent of the amount borrowed. Collaterals guarantees that the loan will be paid.

·        Character

Are you honest and financially prudent? The answer to this question will go a long way in speaking for you when applying for a business loan. Character allows the bank to make a more subjective assessment of your business’s success and the business agility of you and your partner.

In this light, they consider individual factors that represent strength and weakness for a loan.

Small business owner should no longer be terrified of getting loans from banks. Although the prerequisite for acquiring bank loans might seem formidable, with careful planning and adherence to the tips above you may be able to successfully receive financing. Click here for more information: https://www.mainstreetlvnm.org/how-to-get-a-business-loan-with-no-credit/