Wondering about the options available for funding your new business? Check out these 5 possibilities for small business startup loans!
There are currently 30.2 million small businesses in America. If you have entrepreneurial visions, starting your own business can provide you with invaluable freedom and limitless options.
That said, you need funding to supply your dreams! Let’s get into what you need to know about small business startup loans.
The Small Business Administration (SBA) provides microloans to some startups.
These loans only go up to $50,000. That said, the average amount is around $13,000. However, they can be applied towards increasing working capital or purchasing necessary equipment or supplies.
To qualify, you need to be an actual small business according to the SBA’s guidelines. You should also have excellent credit.
The SBA application process can be tedious and long. Ultimately, you’ll need to determine whether this approach is advantageous over faster methods of financing.
Business Credit Cards
Surprisingly, it’s not that difficult to qualify for a business credit card. Issuers typically examine your personal credit score and combined (personal and business) income.
Furthermore, most business cards come with lucrative rewards. Such rewards can include cash back, air miles, hotel points, and extended warranty protection.
Look for a card that offers a 0% introductory financing offer. With this, you can carry a balance for up to a year or more without paying interest.
Crowdfunding sites, such as Kickstarter, have provided thousands of business owners the needed capital to fund their dreams.
Campaigners pitch their business plan and objectives online. Investors (or just people who believe in the vision) can donate to this business idea.
There are numerous types of crowdfunding options available. Some of them work via donations. Others come in the form of peer-to-peer loans (check out lending club business loans for more).
Personal funding is always a viable option. This is especially true if you can’t qualify for a traditional small business loan or credit card. Many entrepreneurs must dip into their own stash to start out.
Home Equity: If you own your home, you can borrow against it. This tends to be a relatively cheap way to secure additional funding.
Retirement Accounts: If you intend to incorporate your business, you can dip into your retirement plan to invest in your company. That said, securing your future is also essential. You probably don’t want to bet your entire retirement savings on a business idea.
Personal Credit Cards: You may be eligible to qualify for a personal card with a higher limit. This limit can help you initially fund your startup expenses. Just make sure to pay attention to your credit utilization and pay every bill on time.
Traditional loans may not always be the best option for your business. Equipment loans provide repayment plans solely for equipment.
Furthermore, it’s usually easy to apply and obtain approval. Your equipment is used as collateral against the loan. Therefore, if you default, the bank can seize the equipment.
Final Thoughts on Small Business Startup Loans
There are numerous small business startup loans available to budding entrepreneurs. Like with any decision, it’s essential to outweigh the pros and cons before making your choice.
Are you interested in learning more about making sound decisions for your business? Check out our guide to business productivity today.