Start your dream business with a startup business loan
The Editorial Staff
Studies show that startups that received funding generated more revenues and created more jobs for the economy.
Daymond John: Millennials lead in smart business technology
Pakistani economy cuts deficits in half in 2015
Android MOTO 360 2nd Generation review: A premium design
Getting a startup business loan will never be easy without a convincing operational track record income. We know that business growth and expansions need cash support. For instance, a 2013 study conducted by four researchers from the University of Texas, University of New York, University of California and University of Los Angeles found that startups and entrepreneurs that received funding generated more revenues and created more jobs for the economy.
But, you might have to hold off the whole entrepreneurship idea if you don’t have access to sufficient amount of funding. If you’re trying to get a startup business loan from the banks, you’ll have to know about various loan options available.
It is a smart idea to get a startup loan with a low interest rate
Are the banks really supportive of providing startup business loans? A study conducted by Biz2Credit showed 1,000 rejected applications of startup loans from various banks. The findings revealed that the major banks that rejected the applications were Bank of America, JP Morgan Chase, Wells Fargo, TD Bank and PNC Bank. Some reasons bank reject startup business loans applications may come from bad credit, low collateral, cash flow problems, among others.
Is it necessary to get a startup business loan?
Tableau Software became a $100 million business without the backup of venture capital. The entrepreneurs, however, made a lot of sacrifices in the initial years. Christian Chabot, CEO and cofounder of Tableau Software, said that they avoided venture capital deliberately.
Chabot said that they had to work almost for free in those days. They downsized their personal lifestyle to save money to invest in business growth and innovative ideas. His advice for the entrepreneurs would be to cut out some of the unnecessary comforts if they don’t want to depend on a startup business loans solely.
How to improve the chances of getting startup business Loans
If you’re really after a loan, try to keep your credit history clean and healthy. Your credit report should reflect diligence in paying your debts. The second thing you should keep in mind is keeping a track of your cash flow. Try to calculate your quarterly cash flow and keep it healthy to get a small business loan. You’ll need to have an organized, quantitative and detailed business plan to impress the banks. Forecast your future earnings and mention it in the business plan to help the lenders know whether the business has the potential to pay back the startup business loan.
When you apply for the loans, prepare a pickup line. You should be able to tell the lenders how you’re going to use the capital, make the repayment and what other back-up plans you have for the worst circumstances.
Alternatives to a startup business loans
What will be your Plan B if you don’t get the capital? You can try Small Business Administration (SBA) loans. The final approval process for the loan takes 60 to 90 days and allows for an amount of $150,000 or even more. However, you’ll need to have a minimum of two years of operational track record to get the loan. You can also get an unsecured business loan without a collateral.
Alternatively, you can try getting a loan from the online lending services such as OnDeck and Kabbage. If you can sell some of your products before the official launch, it can help you make some amount of capital. You can manage home equity loans at a very cheap rate. Sell some of the valuable assets if necessary. Rent your home or try equity crowdfunding. But be sure to read the fine prints when you crowdfund for a startup business loan.
The Editorial Staff
The Editorial Staff at The Business Frontal is a team of writers dedicated to bringing seasoned news stories and how-to business articles to our readers and patrons to help maximize their entrepreneurial potentials.
More from Startups
Startup success rate: Learn from true stories
Startup challenges: 5 things top entrepreneurs run well
Success Keys for startups, entrepreneurs and innovators
Startups exit strategy: Why businesses need exit strategies
Startup strategies that will reward your business
Productive ways to grow your business and be profitable
