Business Loan for Startups: How to Get a Startup Business Loan

business startup

Business start-up loans are among the most applied for business loans today. Although many people and businesses may be applying for these loans, very few business start-up loans get approved.

Among other reasons, one of the most significant challenges these start-ups face is lack of a trading history. The inability to prove regular cash flow can be a reason why lenders don’t get back to you or approve your loan requests. Banks and lenders always view individuals without consistent cash flow, or records to prove it, a risk, which is why they are hesitant to approve larger loans. This makes it almost impossible for an aspiring entrepreneur get financing from these institutions.

cash flow

The only way lenders can reduce the risk of loan defaulting is by looking into your books and evaluating the business’ capability to repay back the loan. Although some business proposals may be hard to resist, lenders will at times need security for the amount applied for. This could be in the form of assets or a guarantor.

Some of the options you might have include:

1. Credit Cards

Almost everyone today has a credit card. Credit cards make it possible for you to have access to funds whenever you need them. Although credit cards were initially designed to help finance personal issues, you can still use it to pay for small business start-up expenses such as website setup, company registration and such. You however need to plan carefully when using these to fund a business project. Nevertheless, you can push the credit to your company, then pull the money from the business once it starts earning profits.

2. Personal Loans

personal loan

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You can use a personal loan to finance a business start-up. You can either apply for a personal loan from LoanOne or your bank. The best thing about personal loans is that they give you access to larger amounts of money, unlike credit cards. Proper planning is also needed when using the loan to get the business going. For instance, you can use the personal loan to register the business as well as get other things going. You can then, later on, start repaying the personal loan using income generated by the business. Getting a traditional bank approve a business loan is way harder than having them approve a personal loan request.

3. Crowdfunding

Although relatively new, crowdfunding provides a way to generate capital for a business idea. It generally involves having friends, family, and well-wishers (or even investors) contributing to your business idea. You however need a platform (such as to post the business idea and ask pledges from friends and anyone else that might be interested. Some form of marketing is however needed to get more people know about the idea and help you raise funds.

4. Micro Business Loans

Micro business loans provide fast and easy ways to access business funding of loans up to $50,000. Lenders, such as LoanOne, will however need assurance that you can repay the loan. Some of the requirements include proof of ownership of a car, house, or another asset. You also need a clean credit history for the loan to be approved.

5. Property Assets

Anyone with available equity in commercial or residential properties has a broader net to cast when looking for a business start-up loan. Most lenders will approve loans of up to 80% of the property value. You may however be lucky to find a lender willing to give loans totalling the value of your property. This however only happens if the business shows signs of bringing in more returns and profits at the end of the day.

6. Equipment Finance

Purchasing new equipment for a start-up company can be a huge investment for the business. Many start-ups find it easier making the purchases from a loan. Most lenders will however only be able to approve equipment loans of up to $30,000. You’ll however need a clean credit score and a sound repayment plan for the loan to get a nod. Getting equipment financing is also relatively easy as lenders see it as an investment and security as well. Buying equipment worth more than the amount mentioned above will however attract strict evaluation of your business trading history.

These are just but a few of the funding options you can use for your start-up. You can start off with these options, then go for a business loan if the business is already registered and running.