Building a business is hard work. And the hardest part is getting access to the capital you need to be able to lease office space, buy equipment/inventory, and to hire employees. This is what start-up loans are meant for. Start-up loans come in many forms including short-term loans, SBA loans, and lines of credit. Most start-up loans give you the flexibility to use the funds for any of your business needs.
How to Apply for a Start-Up Loan?
Most lenders today have an online presence, and this makes loans much more easily accessible. So you can easily apply for start-up loans online through a lending platform simple and quick process. However, to qualify for a start-up loan you have to satisfy a few criteria:
- Your business should be at least 6 months old
- You should have prior experience in the field of your business
- You should have a minimum credit score of 680
- You may have to secure your loan with collateral
However, the most common problem faced by start-ups is that they often lack the business and credit history to be eligible for the most favorable loans through banks. If that’s what you’re facing, here are some promising options that can help meet your needs and goals.
Equipment Financing Loans
These start-up loans are meant to help you purchase equipment for your business by using the equipment itself as collateral. The main advantage of this loan is that you can deduct the interest fees and other financing costs from your taxes. Besides, these loans are quite easy to obtain since your equipment will be used as collateral.
Business Credit Cards
A business credit card is a popular alternative to start-up loans. Just like a personal credit card, a business credit card gives you access to revolving credit. The lender gives you a maximum credit limit, which enables you to purchase everything you need for your business and gives you continual access to capital.
Credit Line Building
This is an untraditional form of funding, where a financing company works with you to apply for multiple business credit cards that can help you get the necessary funding. This also acts as a means to build credit. Building business credit is very important for start-ups because this leads to better financing options in the future.
While it may not be possible for you to access capital through traditional start-up loans, if you use these alternatives wisely, your business credit score is likely to improve quickly. This, in turn, opens up better options such as SBA loans which will give you access to higher amounts at lower interest rates. So make sure you opt for the right product that will lead you to the right entrepreneurial path.