New businesses generally look for additional financial help that they believe they may need to get off the ground, which was once a challenging job since most financial institutions considered them as having little to no business history. Fortunately, there are a few startup loans precisely designed to help new business owners move forward.
You may be confused about where to get a startup loan or which one to choose for your new business venture. Nonetheless, picking the most suitable loan is critical for your business to get a good start.
Here are the top 7 startup loans to consider for your new business.
1. Small Business Administration (SBA) Loans
The Small Business Administration (SBA) is a government agency that has multiple loans to help business owners pay for working capital or fixed assets.
The agency doesn’t send money directly to small business owners. Rather, it sets guidelines for loans offered by the lenders, community development organizations, and microlending institutions partnering with it.
These are the types of loans SBA offers:
- 7(a) loans – The most common type of loan program that offers financial help to businesses with special requirements.
- 504 loans – These loans with longer terms and a fixed rate are suitable to purchase or repair real estate, equipment, or other assets.
- Microlenders – The smallest loan program that offers funding of up to $50,000 to help businesses.
The benefits of an SBA loan include:
- Competitive terms so you can get a loan with rates and fees equivalent to non-guaranteed loans.
- Counseling and support to help you get started and run your business.
- Flexible overhead requirements, lower down payments, and no collateral needed for certain loans.
Microlending is another startup loan option for your new business. What differentiates microloans from traditional loans is that they don’t come from a bank or a credit union.
There are several apps to borrow money online that don’t involve rigid processes or necessitate for you to be physically present to apply for a microloan. Consider researching well and examining your options before you choose to borrow money online.
A trusted app to borrow money online like Lendee can perhaps make it easier for you to source funding because it gives you instant access to a network of lenders who’ll be willing to help you with money when you need it the most.
If you have a newer credit history or a low credit score, microloans are one of your best options for funding.
3. Family and Friends
You can always look to your family and friends to get help with funding for your startup, especially when you don’t want to apply for a bank loan.
Sometimes, a few business owners may use their personal finances to fund their new enterprise. They may also ask their close connections to help them with finances if they need more money. This type of funding is known as a gift or a personal loan.
4. Business Credit Cards
Business credit cards can be helpful when you need fast cash for everyday operations. Additionally, they help you build credit so you can easily and quickly secure a business loan from a bank.
It’s worth noticing that just like personal credit cards, you should make payments towards your business credit cards on time, else you may end up paying interest and fees. Moreover, late payments can result in bad credit.
As the name suggests, crowdfunding involves raising capital from a large set of people. Several online platforms allow you to create a campaign where people can make small contributions to help you with money.
Crowdfunding can raise enough money to help you cover working capital costs and various other expenses.
Federal and private organizations, as well as a few professional associations, may offer small business grants to help with some of your startup expenses. Although, be careful since some grants may only be available for certain types of businesses.
For instance, only jewelry businesses are eligible for the Halstead Grant, and only non-profit and educational organizations are eligible for the Wells Fargo Community Giving grant.
7. Angel Investors
Angel investors are usually wealthy individuals who see potential in your business and are interested in investing large sums of money.
They are willing to take the risk in the hopes of making a large profit after thoroughly examining your business plan.
While we’ve listed the seven most popular small business loans, there are still many more options to look at, and finding the right loan can be a time-consuming process.
The type of loan you are looking to secure for your business will determine how you apply for it. Always ensure you know all about the lender’s qualifications, have your financial history in order, and have a strong business plan that’s well written, designed, and easy to follow.
Visit www.lendee.com if you are looking to get a loan at a competitive rate with more flexible payback options.