Getting a business up and running is easier but the hard part is the money needed to startup the business. Fortunately, there are many solutions to this setback. One of the most popular ways to get the funds you need to kick-start that great idea is through startup business loans. Start up business loans provide you with some money to work with, sufficient enough to get your startup off the ground. So, how do you go about it? In this article, you can learn nine ways for getting startup business loans.
Many employees who intend to start their own business often face financial challenges. While this has discouraged a lot of startups, many have not given up on their hunt for a loan. For those who seek to start up business loan, there are many options to choose from – some of which you are already familiar with. Each startup loan option comes with its own merits and demerit. We hope this article will help you discover the best low-cost startup business loan that will meet your needs.
What Is A Business Startup Loan?
A small business start up loan is a funding source that helps to meet the financial needs of a new business. New business owners use start up loans proceeds for:
· working capital
· inventory
· supplies
· machinery
· furniture and upholstery
· the purchase of equipment
· real estate acquisition
How To Get A Startup Business Loan In 9 Ways
If you are an aspiring business owner in search of a start up loan, then consider the following business start up loans options:
1. Invoice financing
Invoice financing is quite different from invoice factoring. It is a convenient way of getting paid by your customers via invoices. It is a speedy option that requires little paperwork yet it can be an expensive way to avoid cash flow issues as a result of long invoice cycles.
2. Equipment financing
Starting a new business may require you to purchase some equipment to get off the ground. For instance, if you want to start up a courier service business, you will likely need equipment like delivery vehicles, cash registers, computers, printers, etc. The chance of acquiring this set of equipment all at once is small. However, it is possible with equipment financing. With equipment financing, every piece of equipment serves as collateral for the loan. It is a good way to kickstart a new business especially if you are not firmly grounded. The interest rate is usually small and at low risk because the equipment acts as collateral which comes at low risk.
3. Crowdfunding
Crowdfunding is among the startup business loans for bad credit guaranteed. This method of acquiring start up business loan requires the business owner to share his/her business goals and objectives with a group of potential investors. Because of the competition, a lot of marketing efforts need to be invested. Howbeit, it’s worth it.
There are three main types of crowdfunding namely:
I. Equity is the most accessible funding option – a good example is Wefunder.
II. Rewards e.g. Indiegogo, Kickstarter
III. Debt e.g. Kiva
4. Business lines of credit
A business line of credit is an all-purpose startup loan that can finance several things for your business. You can open a business line of credit and use the funds your business’s ongoing operations including:
· Inventory
· Additional working capital
· Supplement gaps in cash flow
· Payroll for temporary employees
· Pay off more expensive debt
· Backup coverage of unexpected costs
5. SBA Microloans
SBA microloans are a term loan that is used for the purchase of:
· supplies/inventory
· furniture and upholstery, etc.
· or as working capital
They are made by non-profit organizations and approved intermediaries, for instance, community development financial institutions (CDFIs). It comes with an average and maximum term of 40 and 72 months respectively. In SBA microloan, the average loan is around $14,000 while the total maximum loan amount is $50,000.
6. SBA 7(a) Loans
There are several different types of SBA loans, and the SBA 7(a) program is among the most popular as it offers loans up to $5 million. The Small Business Administration – SBA 7(a) loans aren’t easy to get yet they are among the startup business loans bad credit. They are more likely to go to experienced business owners, for example, a franchise.
7. Credit line builder
A credit line builder program allows you to apply for multiple business credit applications. You work with a financing company that approves you for a credit amount that will be equivalent to all the credit cards you qualified for. While this saves a lot of time and effort you still need to avoid spending excessively and late payments. The penalties can be harsh.
8. Business credit cards
This is a popular method of getting small business loans startup. Business credit cards are given to startups to access on-hand capital or cash withdrawals from a revolving line of credit. They are easier to acquire as they don’t require any collateral.
9. Personal financing, friends and family funding
I encourage startups to have personal savings of their own before venturing into any business. Personal financing and soft loans from friends/family is a viable option; however, you need to have a solid business plan and a precise estimation of the capital you’ll need to get started. You may not have anyone to run back to if you misappropriate the funds given to you.
12 Tips To Prepare For A Loan To Start Your Business
While thinking of where to get small business start up loans, you first need to put some things in place. They are:
1. Review the startup cost that you need to get started
2. Develop a solid business plan
3. Boost your credit rating
4. Register your startup with the local government
5. Review your annual revenue
6. Review your cash flow
7. Build your assets
8. Keep updating your financial projections
9. Prepare to meet investors
10. Build your customer base
11. Consider the business timing
Bonus Tip: Looking For A Business To Start Without A Loan?
Do you know you can start a small business without the need to access loan programs? While many people seek financial assistance (via loans) to startup their businesses, you can start the dropshipping business model with zero capital. In the dropshipping business model, you sell products without keeping an inventory or renting a warehouse and make money. How?
· Open an online store
· Look for reputable dropshipping suppliers
· Browse through over 30,000+ profitable SKUs from SaleYee.com
· Import the products into your online store and add your desired price (usually higher than the supplier’s price)
· Promote your products via social media, word of mouth, etc.
· When a customer makes a purchase, transfer the order to your supplier from SaleYee.com
· The difference between the supplier’s price and your set price becomes your profit
Dropshipping with the SaleYee platform comes with a lot of benefits including:
· You don’t have to handle shipping and delivery – SaleYee.com takes care of this
· Enjoy 24/7 customer support
· With 630,000+ sq.m. local warehouses, your customers will receive their orders within 48 hours regardless of their location
· Enjoy free delivery on some items
· Getting started is free – no listing fee, no additional charges incurred
· Enjoy big discounts on most products
Conclusion
A bank loan may be the first thing that comes to the minds of many startup businesses; however, the problem with a bank loan is that they often make funds available for established businesses – they have strict small business lending standards. Follow any of these startup business loans options and light up that great idea of yours.