Explained! Everything You Need to Know About Startup Loans
Entrepreneurs and founders of startups have many ways to begin with a new business venture – ranging from personal savings to crowdfunding and startup loans. In this piece, you’ll know all about loans for startups.
Did you know there were more than 30 million small businesses in the US in 2018? Also, are you aware that it doesn’t take more than six days to start a new business?
However, only 2 out of 5 startups remain profitable after a few months. Some fail to raise money while others continue to lose money. But, startups are risks worth taking. If you succeed, they not only make you earn a lot of money but also create new job opportunities.
For a successful business, you need to ensure a smooth and steady flow of capital required to fund your operations. When you don’t have money to fund your startup, you can opt for other options, such as easy-approval startup business loans.
- What are Startup Loans?
Also known as startup business loans, these are loans that you can obtain to establish or expand a business. These kinds of loans can be available in different types – including short-term and long-term business loans.
One of the significant advantages of these loans is that you don’t have to give your company’s ownership to someone else, also known as an investor.
Apart from that, some other benefits of startup loans include:
- Quick money to establish a business
- Reserved personal wealth
- Business credit
- How Can You Get a Loan to Start Your First Business?
There are different ways to obtain a loan for your startup, such as banks, financial institutions, and online lenders. The process of getting a startup loan majorly depends on a lender. For example, a bank’s process may be time-consuming and involve a lot of paperwork to check whether or not you qualify for a business loan. On the other hand, an online lender may provide you with funds in just a few days.
You should collect information on a lender and a loan’s conditions before proceeding with the loan application.
- How big of a Loan can You get to Start a Business?
It also depends on your lender. For example, a bank will check your credit score, determine a payment method by which you can pay back, and a business plan. Here, a bad credit score may eliminate your chances of getting a loan or decrease the amount you may get in the form of a business loan.
Similarly, a private lender will evaluate your startup, its chances to succeed, and lots of other things. However, an online lender may offer you startup business loans with no revenue and with a bad credit score.
The best way to know how much loan you can get for your startup is to contact a lender and discuss your business with them.
- What is Required for a Business Loan?
Some online lenders will provide you with a loan even if your business shows under one year of operations. In most cases, you must have experience of at least six months in running a business.
Apart from that, you may be asked for a minimum credit score of 600 and an annual income of $100,000. But, there are lenders too who enable you to get startup business loans with a bad credit score.
Conclusion
Obtaining startup loans may seem a time-consuming and tricky process, but it becomes a lot easier when you know how to begin with and where to head. Rather than contacting the first lender you come across, research your options and collect information to make sure that you reach a lender who provides you with the required amount.
All the best!
