Best Ways to Get Small Business Loans for Startups

It is incredible how people waste a lot of time seeking magical shortcuts to becoming successful and fulfilled entrepreneurs. One easy way to bring your dream alive is to get small business loans from the government or individuals.

However, to be factual, the only available tangible path is starting right in the face of economic depression. In other words, it is one thing to have an idea; it is another to get appropriate small business loans.

It is challenging and requires a lot of hard work and perseverance to get substantial small business loans these days. Yet, the reward is worth every sweat. Many potential entrepreneurs dream of running their own small business but getting started becomes an ache in the head.

Moreover, starting a small business has its challenging attempts, but it is not without rewards. One of the most prominent issues people with small business dreams face is getting the capital to actualize the initial startup.

If you’re passionate about hanging your “open for business” sign on the door, you’ll need a small business startup loan.

If you have ever searched for small business loans for the startup, you might come across several available options. Each option has its pros/cons and different procedures and requirements of the application.

If you are ready to start your small business, you will have to read through this article. I have compiled a list of startup business loans for startups that will help you discover easy-to-get low-cost loan options.


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Sources of Small Business Loans for Startups

1.       Startup Consultants

Starting up a small business is rather challenging and requires tangible professional advice and guidance. There’s a lot of benefits to contacting a business startup consultant before securing your small business loan.

It sure will put you on the safer side. Typically, a consultant will charge you a premium to connect you with the proper funding that fits your business plans.

You will have valuable information regarding the necessary documents you will need to qualify for the small business loans.

Generally, the best way to get a small business loan for a startup is through a trusted startup consultant. The premium is worth the opportunities.


2.       Equipment Financing

Traditionally, when securing a small business startup loan, people tend to think about banks first. Of course, banks provide reasonable lending opportunities.

It may be an excellent place to turn if you are ready to start up your small business and need startup loans.

However, a business loan from a bank is not the best option for small startups. Banks have strict standards for small business startups.

Equipment Financing is the best way to secure a small business startup loan from banks. Banks specifically design Equipment Financing to pay for the purchase of equipment or machinery.

You can purchase all your necessary equipment for starting your small business through Equipment Financing from your bank.

Like conventional loans, equipment loans involve monthly repayment terms for a specified period. Meanwhile, using Equipment Financing lending means that your equipment will serve as collateral to the bank.


3.       Business Credit Cards

Business credit cards are preferably good options for small business startup loans. They can help you start your small business conveniently without hassle or pressure.

Business credit cards separate business finances from personal and also establish your business credit. Before you can qualify for a business credit card, you will need a healthy personal credit score and income.

Issuers will ensure they check your personal and business income to have a sense of guarantee. Issuers of business credit cards don’t demand collateral but check your credit score to weigh your payback capability. Business credit cards offer some benefits of great reward programs and signup bonuses.

Several seasoned financial experts recommend that a card with a 0% introductory financing offer work better with startups plans. It will enable you to make several purchases and carry a balance for up to 15 months without paying interest.

The latest Federal Reserve Small Business Credit Survey unveiled that about 59% of the small business owners used business credit cards to start and grow their businesses.


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4.       SBA Microloans

Small Business Administration (SBA) loans are the most basic and most commonly used Small business loan for startups. SBA came from section 7(a) of the Small Business Act, which approves the agency to provide business loans to Startups in the US.

The loan program aims to support individuals who want to start a small business but lack the initial startup capital. SBA is your perfect option if you reside in the US and cannot get financing from other available resources.


Program Requirements

To begin with, SBA loans are available to businesses only. It’s not accessible for individuals. The requirements to qualify for this loan depend on the business goals and objectives and not the owner’s demands.

Generally, for any business to be eligible for financing under SBA’s 7(a) loan scheme, it must meet all the SBA standards.

Furthermore, the business must be profit-oriented, not have no internal resources, and repay accordingly.

Individual variations of this loan program may also require some additional eligibility criteria. Also, you need to know that small business loan requirements vary from one financing body to another.


SBA Loans for Women

There are no small business loans for startups specially designed for women. However, there are many lenders and small business loan programs committed to supporting female entrepreneurs.

Some of the best small business loans for women include SBA loans, Lines of credit, online loans, and microloans.

It is somewhat hard to decide which small business loan is best for women; SBA loans top the list. SBA loans are not exclusive to women alone. It’s available to every small business owner. Only that, when it comes to getting a small business loan for a startup, women tend to go for SBA loans.

SBA loans, above others, provides a better financing opportunity. They are better in terms of competitive payment terms, interest rates, and payment options. One of the highest points of the SBA loans is that they are fit for any business purpose.

SBA is a government entity that proves to be a more reliable and guaranteed option for small business female entrepreneurs. However, SBA itself does not grant loans. Instead, banks and other lending institutions make the loan while the SBA subsidizes a portion of the loan.  This makes most lenders work with small businesses.

SBA loans are great financing options for women, especially for small business startups. Those who qualify can get the lowest rates and longer-term financing up to seven years or longer.

SBA also provides small business owners multiple programs within their scope of business loans. For instance, women can get a microloan of up to $50 000 for startups.

The first step is to approach any nearby SBA Lender to qualify for SBA loans. There are several set requirements that you would need to meet before accessing the loans.

They include reasonable annual revenue, good credit score, a few some paperwork, and more. The application process of SBA loans for women is straightforward but can take a long time before approval.


small business loans for startups


SBA loans for Veterans

Many veterans consider it wise to start a small business to sustain cash inflow after returning from serving their country.

However, one of the major issues is where and how to get small business loans for veterans. Veterans who are seeking small business loans for startups need nothing more than VA small business loans.

VA small business loans are great options for startups capital and continuous funding of their business. Moreover, these small business loans are the best if you serve in the military and desire to start a small business. VA small business loans are the best small business loans for veterans.


What is the Veterans Administration (VA) Small Business Loan?

VA (Veterans Administration) small business loans have a partial guarantee by the Small Business Administration (SBA). Banks and other financial institutions make loans.

But, if the borrower defaults, the SBA partially reimburses the financial institution that made the loans.


5.       Other Microlenders

The SBA is not the only option for small business loans for startups. There are several micro-lending institutions out there that can assist in providing startup capital.

Microlenders are non-profit organizations that offer financing solutions to entrepreneurs who desire to start a small business. They provide an opportunity to secure financing for starting and running the business.


6.       Lines of credit

Lines of credit are agreements between lenders and borrowers that allow borrowers to access loans at any time.  As far as the term “lines of credit” are concerned, entrepreneurs can get loans frequently based on a certain maximum amount.

One of the highest points of lines of credit is flexibility. You don’t need to pay back all the total amount for which you applied. Lines of credit exist in varieties, including secured, unsecured, non-revolving, and demand lines of credit.


7.       Crowdfunding

Crowdfunding is not a new means of raising money. Many people have benefited from diverse crowdfunding platforms to raise funds for projects.

Similarly, you can also use one of the media platforms to raise capital to start your small business.

Typically, getting your small business loans through crowdfunding requires sharing one’s business plan with the public.

This will, in turn, attract donations and supports from people who believe in your business visions. The crowdfunding process is called a campaign, and the business owner is called the campaigner.

Although the campaign requires many marketing strategies and unwavering commitment, the reward is worth the effort.

One of the advantages of crowdfunding is that it doubles as a means of publicity. If you succeed in crowdfunding, you can be sure you have potential customers already.


8.       Personal and Friends/Family Funding

Personal funding also works well in starting a small business. It requires a commitment to calculate all the costs and not break them down before the company can help itself. The few different options of personal funding include: 

  • Personal Credit Cards: A personal credit card with a commendable high limit will help you make the first few purchases. This is a call to concentrate more on your credit utilization and maintain regular payment of bills. Making business expenses on personal credit cards is dangerous to your personal credit history.
  • Savings/Home Equity: If you have the right amount of money in savings, this can be a good time to withdraw. Of course, it is risky. Nevertheless, it is one of the hassle-free options available for you. Besides, your family can also be your investors – if they are willing. Family can provide good, positive support for your business if your business plans are reliable enough.


Standard Requirements for Small Business Loans for Startups

To start with, your business credit score is the foundation on which you will build your creditworthiness. It’s an essential requirement for getting affordable small business loans.

A good credit score will position in a more advantageous spot than a bad credit score.

If you want to increase your eligibility chances for small business loans for startups, it improves your credit scores. Other standard requirements for small business loans include the following:

  • It would help if you had an updated business plan containing the details on marketing strategies.
  • Also, you need a copy of a profitable business and personal credit report.
  • It also requires a detailed business forecast with a future cash flow and costs analysis.
  • Tax returns and supporting IRS documents to show your personal and business tax accounts.
  • You may have to submit applicable licenses and registration documents that prove your eligibility for doing business in your state.
  • It requires all relevant financial documents (including bank statements, unpaid invoices, credit card sales, and more).
  • You may have to submit any relevant legal contracts (including incorporation, franchise, leasing, and more).
  • Submit documentation of underserved representation (If required).

Meanwhile, the process may take longer at times. Once you’ve submitted your application, you might need to be patient before the funding is approved.

Some financing options come quickly. You can get them approved in a few minutes.

Some, on the other hand, may take up to months before approval. Be sure you know how long the processing would take before you apply for any loan. This will put you on the safer side.


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Final Thoughts

Starting a small business may seem easy, but it can be expensive and challenging. Beyond doubt, the starting point is the most demanding stage of the entire business lifecycle.

Many entrepreneurs will tell you it’s hard to find lenders; that’s true! However, getting small business loans for a startup is not impossible.

The several options listed above would help you select the best one that suits your business plan. Whichever you decide to apply for, be sure that you do the necessary research before applying.

Also, it would be best if you were confident in your ability to repay and be realistic with your plans. Even if you secure a high credit limit, these factors need proper considerations.

Above all, be prepared, ready, and motivated to take the bull by the horns. The road to a worthwhile startup business loan is always rough, but it’s not impossible.

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