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Questions For Startup Business Loans

by Nelson Bou • 2020-03-27

Do I need to have a corporation set up to begin the funding process?

Lenders will require that you already have a corporation set up. However, Abundant Funding will work with you before you set up a corporation to help you get started. We will explain to you how the funding process works and will let you know what to expect.

Do I need to have previous business experience?

Yes, but if you havent owned a business before, thats okay. Lenders like to see individuals with experience in a particular industry. For example, if you want a loan to open a restaurant, lenders would like to see that you have worked at a restaurant for many years. If you want to start a trucking company, lenders like to see that you have worked for trucking companies in the past, etc.

Do I need to have good credit?

Generally, yes, startups can be hard to tackle with low credit. Most Lenders will want to see a FICO of 650 to not get instantly declined, but to have better success typically startups need to have 680 credit or higher.

Credit can play an extremely large role when it comes to startup funding. This is why we highly recommend credit repair services like IDIQ and credit monitoring services like NAV if you are trying to get funded. The funding process can take a long time, so we highly recommend that you get set up with these services early on.

How long does it take to get funding?

On average SBA Loans take around 30-45 days from the application date to the funding date. However this time frame may vary depending on the type of loan you are applying for However, many entrepreneurs have found that getting capital for a startup business can take anywhere from six to nine months.

Do I need to have a business plan?

Yes, most lenders require startup businesses to have some form of business plan to acquire funding. Abundant Funding can help you develop this plan if necessary.

Do I need to have a resume?

It is a good idea to submit a resume with your application. A resume helps lenders get to know who you are and become familiar with your past work experience.

Do I need to have a letter of intent?

Generally, yes, if you are purchasing an existing business or some kind of equipment, a letter of intent helps lenders understand the nature of the deal.

What documents will I need to provide?

Depending on the loan amount, you may need to provide tax returns, profit and loss statements, balance sheets, business plants, etc. The extent of the documentation required ultimately depends on the loan amount requested as well as the nature of the business being funded.

What are the best loan programs for startup loans?

The best loan program you can use to start a new business is the SBA 7(a) loan program. However, the qualifications are very strict, and these loans can be difficult to obtain.

Microlenders and nonprofit lenders can be a less difficult route, especially if you do not have the best financial circumstances. Many of these lenders focus on minority or traditionally disadvantaged small-business owners, as well as small businesses in areas that are struggling from an economic perspective.

A ROBS financing transaction is also a good option for small businesses when it comes to financing. While this option is risky, it is a good option for individuals with low credit and very little collateral.

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