Startup Business Loans

Getting a new business off the ground takes capital. Startup business loan is a great option for new businesses. Compare small business startup loans below!

Compare Startup Loans

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Guide to Startup Business Loans

startup business loansNew business owners have to face the tough task of finding the money to finance a startup. Although you may have an extraordinary idea and a solid business plan, you may still struggle to obtain traditional startup loans.

As one might deduce from the title, small business startup loans are meant to help with the financial needs of a new business. The loan can go towards things like working capital, purchase of inventory and supplies, or construction of real estate.

Financial institutions and lenders are often hesitant to offer credit services to businesses without a good credit history, a record track of at least two or three years and an owner’s equity’s stake in the business.

Lending money to startup businesses is often considered riskier than established businesses. Since the business lacks evidence of its ability to succeed and has no revenues yet, there is a smaller chance that the business will be able to repay the loan.

Types of Startup Business Loans

Established businesses can pay for things such as inventory, equipment furniture, and marketing expenses. A brand new business may not have that ability and will definitely need a loan. So what are the options?

  • Equity financing: This is a way to fund your business by seeking funding from investors who agree to become partial owners in your business. The level of ownership of these lenders in your business would be proportionate to the size of their investment.
  • Microloans: One of the major problems facing business owners is that they only need small business startup loans while most lenders only offer large loans. To fill this gap, some lenders and organizations now offer microloans for small amounts of money to startup businesses.
  • Equipment financing: Lenders would often expect collateral before granting business startup loans to borrowers. This type of loan is specifically designed to pay for the purchase of equipment for startups. Lenders include equipment dealers, banks and online providers.
  • Personal loans from a peer-to-peer lending: This process involves borrowing money from an online site that matches you with individual or institutional lenders. This enables you to reach a lot of investors willing to offer you small business startup loans.
  • Angel investors: You borrow money from wealthy individuals who lend money debt-free in exchange for an ownership stake. They like to invest in early age startups. However, they do not take an active role in your business.

The Application Process for Startup Loans

Since you want to start a business, lenders will be more focused on looking at your personal credit score and previous experience in the industry.

Lenders will also want to see a detailed business plan before offering business startup loans. This will help them determine if the startup loan would really help you grow your business.

Various lenders have differing terms, so it is always good to compare your loan options. The comparison tool on the site will help you choose a startup lender who suits your needs.  You will need to have a definite repayment plan in advance.

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