By - Antonio Hicks

How Can You Get A Start-Up Loan?

If you are about to run a start-up, the biggest challenge will be finding the right financing to meet your operating costs as well as balancing them with the expanding need.  So mentioned below are some of the ways by which you can get a start-up loan for your new venture.

  • Start-up Consultants:

Starting a new company includes many challenges. The truth is that half of these new businesses will not be able to last for at least 5 years. If you make a wrong decision such as get the wrong funding, it can drown you in the early years. So make use of a start-up consultant. Such consultants usually will be charging a premium for connecting you with financing and it will be worthy. Before getting hold of funding, they will be checking your funding viability and ensuring that you are well covered with all the essential services that any start-up requires like creation of a business plan to insurance and so on.

  • Equipment Funding:

Traditionally banks are one such financial institution that is popular for their lending chances. So if your relation with your bank is good, you can look up to it for funding your start-up. But for a large number of start-ups, traditional loan is never the perfect option. Banks will show stringent lending standards. Moreover whatever they have to offer is mostly only accessible to all established businesses. You may be able to work with the bank for securing equipment funding. It is designed specifically for paying for equipment as well as machinery purchase. Equipment loans are same structurally to conventional loans and have repayment terms for each month over a long duration. Further, these proceeds must be used only for purchasing any equipment or machineries. Lending standard on these funding will be not so strict as the equipment will get used in the form of a collateral for your loan. So if you become a defaulter, the bank will be having the right of seizing your equipment for covering the expenses of their money that is lost.

  • Microloans:

Apart from 504 loan program as well as SBA 7(a), SBA will also be offering microloans that are made via community development financial institutions as well as non-profitable organizations. It is accessible till $50,000 and can be used as a working capital or to buy inventory, supplies, machinery, equipment, fixtures as well as furniture.  Other than SBA, there are also other micro-lending options. You can check two options such as:

  • Accion:

    Till $10,000 it is available. It is an excellent start-up loan if you are in business for less than 6 months and own any home based business. As the required credit score is 575 or more, it is a great option for borrowers who do not have a strong credit.

  • KivaZip:

    It works on a large community based platform that is driven by trust. Start-ups can crowfund start-up loans from individuals who are philanthropic minded and it can be till $5000. Such loans have a 0% APR and are offered to entrepreneurs who struggle a lot and have proved their characters, invited their individual lenders, were not able to get access to other funding means as well as owns a business that comes with a recognized positive impact on the society.

  • Personal Funding:

It is a viable option. But making use of personal funds will be a huge gamble. You must do a proper calculation of your expenses. Thus you will not be running short of money before your start-up can add support to itself. If you use personal funding for starting your new venture, it is always advised to start establishing your business credit immediately. Thus you will be able to leverage your business credit and get access to more capital later. Your business will also be able to become established itself rather than involving your credit as well as personal assets. There are also some options of personal funding such as:

  • Personal Credit Card:

    If you are unable to secure your business credit card, then look out for a personal credit card with a high limit. It will aid you in getting all the initial few purchases as well as your business in the beginning. Focus on the way you utilize your credit and clear off all the bills timely as making any business expense on your personal credit card will be ruining your personal credit report.

  • Savings Or Home Equity:

    Making use of your savings is very risky. But if there is enough money that is kept aside, it will be your cheapest option. You can also borrow money against your home for your start-up as it will be a cheap option too.

  • 401k:

    If you have a plan of incorporating your business, your retirement plans such as 401K or IRA savings can be used for investing in your company. Remember that it might not be a good idea to invest the entire retirement savings upon your start-up business. A person who applies for a start-up loan needs to be aware of his needs and financial position because he has to repay the loan and other costs incurred from the daily activities of the business.