When you get a small business startup loan, you are looking for financing to get your business up and running. The loan monies can be applied to your initial purchases, renting a building, machines, supplies, inventory, and more. In addition to loans, you can consider credit cards, crowdfunding, and more. Continue reading to learn about small business startup loan options to know.
Equipment Financing
Equipment financing is a type of loan that helps you get equipment and machines that you need for your business. These loans are easier to qualify for because they will use the equipment you purchase as collateral. If you default on this loan, they will come back and repossess your equipment. You can also look into leasing your equipment, and some companies have a lease-to-own option.
Business Credit Card Options
Credit cards designed for businesses offer an unsecured line of credit that can help your business get started. They will start building credit for your business, and they will help you keep your personal finances separate from your business. When you apply, the bank will look at your personal credit score to determine your creditworthiness before they approve your business for a credit card. You can often find cards with a promotional 0% rate for a period of time, which is a great way to start out.
SBA Loan
The Small Business Administration guarantees loans for small businesses, and one popular program is the 7(a) program. They offer loans up to $5 million, and it is a slow process, but if you meet the qualifications, it is a good loan. They offer different terms for different loans, and they consider a number of factors, including your creditworthiness and your experience in the field.
Microloans
Microloans are offered by the SBA and other nonprofit organizations. They provide the opportunity for small businesses to borrow smaller amounts of money. These loans might be between $15k and $50k, and they usually have a term of 40 months. This is a great way to get financing when you don’t need a lot of financing to get started.