by Winston Stiller • 2020-01-06
It is important to remember the 5 C's of credit when applying for a business startup loan. The 5 C's of credit are Character, Capacity, Collateral, Capital, Conditions. If you keep all these attributes in mind when analyzing and applying for loans then you are much more likely to succeed. You should read more about the 5 c's of credit before you actively pursue a startup business loan.
But regardless, let's review your options for obtaining a startup business loan!
The sba 504 loan program is an economic development tool that incentivizes lenders to lend more money so that individuals can start new small businesses and existing small businesses can expand and grow. You can learn more about this program by viewing the sba 504 presentation on the sba website.
Sba 504 loans typically require a 15% down payment for startup businesses. In addition to requiring documents such as tax returns or personal finance statements, the sba also requires startup businesses to provide projections for the new business being created.
The sba 504 startup loan program has rates that range from the 5 year treasury rate + 2% to a fixed rate of 4.322%. The sba also has many programs for established small businesses that are beginning to create new small businesses.
If you are looking for a startup loan that does not require any capital then you should definitely pursue an unsecured business loan. An unsecured business loan is basically a business loan that is not secured by any collateral. You should definitely read more about the pros and cons of secured vs unsecured loans
Unsecured startup loans can be very beneficial to small businesses that just got off the ground. This is a great option if you have no collateral for a loan or if you happen to have a really good credit score. Or maybe you have both! If so, this is definitely an option for you.
The three main types of unsecured business loans you should consider applying for are:
- Unsecured lines of credit
- Merchant Cash Advance
- Business Credit Cards
ROBS 401k Startup Funding is a rollover program that allows you to finance a loan with a 401k rather than basing your eligibility off of your credit score alone. 401k and IRA rollover funding is simply using retirement plan savings to fund a business. This specific program is tax deferred and penalty free. This type of loan program is sometimes called ROBS or Rollover for Business Startups.
This program is helpful because ROBS is not a loan, it does not report to personal credit or business credit, there is no interest, it comes without restrictions on the money, and it has no industry limitations. You can visit our startup page to get more information on 401k startup funding. If you submit an application we will match you up with a lender that will consult you on the matter for free!
A large portion of startups such as construction companies, restaurants, fitness centers, and printing companies will need a large amount of equipment to start their business. There are many options that allow startup companies to obtain financing for the purpose of purchasing equipment.
When you apply for an equipment startup loan you will typically be applying to purchase a very specific piece or pieces of equipment. The lender will most likely lend you 100% of the cost of the equipment. The equipment you are purchasing ends up becoming the collateral for the loan. This is why the lender will spend a lot of time asking for information and details about the equipment being purchased.
Some good resources for equipment loans for startup businesses include:
You can also go to well known finance company Fundera's website to read more about equipment loans for startups.
You should definitely go to First American Merchant's website and read about the merchant loans for startups that are available.
Wells Fargo has a great healthcare practice financing program for startups. In fact, Wells Fargo startup business loans are a great option for all startups and small businesses. You can visit their website to read more about healthcare practice startup loans.
You can visit Agency Equity to learn more about Insurance Agency Startup Loans.
Online finance company Become has a great list with the best startup trucking business loans available.
This one can be tricky, but if you are in the cannabis industry it is well worth the effort! The SBA currently does not fund marijuana or cannabis related businesses due to complicated regulation matters. However, there are many other resources that can help you get your cannabis business funded and off the ground! Fundera can tell you more options for starting a cannabis company.
The FSA has an abundance of startup loan programs for farm and agriculture related companies. You can go to their website and read more about the Beginner Farmer Loan Program.
Here is a list of some of our favorite startup loan programs: