Getting a business off the ground takes innovation, perseverance, determination, and financing.
Usually, start up businesses are in need a cash flow to grow their inventory right out of the gate or for other expenses associated with beginning a venture. There are a variety of business loans for which a small business might qualify, but not all lenders are willing to finance start ups so a lot of research will need to go into finding the right funding option for your new business.
start up business loans
The first place that everyone looks for a loan is a bank. What many new business owner might not realize is that financial institutions like Prime Commercial Lending also offer standard SBA business loans as an option. In order to qualify for financing, the new business owner will need a good business plan and demonstrate the financial ability to make the monthly payments.
The Small Business Administration (SBA) helps instruct new business owners on how to correctly apply for loans if they are not familiar with the process. If a business owner does not qualify for a traditional business loan, the SBA does offer programs to help. In this case, the SBA guarantees a loan, which means that a portion of a loan obtained from a qualifying lender will be repaid if the borrower defaults on their business loan.
There are 3 types of programs sponsored by the SBA:
1. The Basic Loan Program is the most basic and popular program and is used for start-up or expansion.
2. The Certified Development Company Loan Program provides fixed-rate financing for an established business looking to expand.
3. Finally, the Microloan Program, which is also used for start-up businesses, but this time the money, can come from nonprofit lenders sponsored by the local community.
Bad credit will be a detriment in that it might take a while to find a lender willing to finance the business, when a loan is achieved the interest rate will be higher, and there will be a requirement to adhere to stringent repayment options. Having decent collateral like a house or a car will increase the chances of being approved, but it also puts the borrower at greater personal risk. Checking credit histories and removing any incorrect reports will allow the potential business owner greater chances of winning the loan from financial institutions.
Learn more about the alternative loan options available for start ups and poor credit borrowers offered by Prime Commercial Lending, here.