Top 5 Options for Small Business Startup Loans

A major challenge for any small business startup face is the means to obtain the capital sufficient to support and help them in their initial growth. To turn up the metaphorical or physical tag “ready for business” you will surely need to have access to more money in the form of small business startup loans. Whether you are looking for small business loans in Florida, or elsewhere across the country, obtaining this initial finance can change the production and development of the company and business as a whole.

It is also important that you listen to the advice of as many successful startups as possible to ensure you follow the same path. The words of Franck de Vedrines could be invaluable to you and your startup.

One may also assume right from the title that this business loan is for startups, to help them with their basic financial needs as they start their new business. Usually, most small business startup loans could go towards working capital, machinery supplies, equipment, furniture, inventory, supplies, and the construction or purchase of the real estate.

Where Can You Get Small Business Startup Loans?

Have you started your hunt to find a loan? If you have, then you must be well aware that there are infinite amounts of financing options for businesses out there. All these options have their own pros and cons; perhaps you also discovered that most of the low-cost options are not available to business owners without years of good business under their belts.

To help you with your options, here is a list of five possible options you can choose to secure a business loan for your startup.

1. Equipment Financing

Traditionally, people turn to banks for their lending options. Luckily, if you have a good relationship with your bank, this may be the right place to turn. However, for the majority of new businesses, a standard loan may not be the best option.

The reason behind this is that banks have strict lending standards for small businesses, and what they have to offer is only available for established businesses. However, you may be able to coordinate with your bank and secure this type of equipment financing loans.

As the name suggests, this loan comes with specific designs you should pay for the purchase of machinery and equipment, similar in structure to traditional loans, with repayment terms on monthly basis for a specific period.

However, these proceeds must only be strictly ones you use for machinery and equipment purchases. The lending standards on your business equipment financing could be less strict since your equipment will be collateral for the loan. In simple words, if you default, your bank then has the right to seize your equipment to cover the cost of the money they lost.

Similarly, software that can boost your business should also be a consideration here. For example, in the hemp industry, there is a dispensary point of sale software that can be used to help run front and back end operations more efficiently.

For a dispensary, a high quality POS system can have huge benefits when it comes to managing and growing a successful business, so could prove to be a fruitful investment. The hemp industry is growing at a rapid rate, giving rise to more and more producers like Wild Hemp who are bringing plenty of innovation to the market, and increasing demand for technology like POS systems which can help them to expand.

2. SBA Microloans

For small businesses, SBA microloan programs are ideal, especially if you want to expand or start a business. Although there are many loan-seeking options, many entrepreneurs contact agencies, such as Aurumfi and others to help them with their needs. As their name suggests, microloans are smaller amounts compared to the standard business loans. These typically, they are through CDFIs (Community Development Financial Institutions as well as non-profit organizations. These are available to about 450,000 and they are ideal for working capital or the purchase of supplies or inventory, equipment or machinery, furniture or fixtures.

3. Invoice Financing

If you receive payment from your customers through invoices, then invoice financing is suitable, although an expensive way to avoid all the cash flow issues that come by with long cycles of invoices. Through the use of factoring companies, you’ll find that this is a speedy option and you can get your financing in a little time, even within a day and requires less paperwork.

4. Business Credit Cards

Usually, these are great alternatives to small business startup loans and they help you to get off the right foot by separating your personal and separate business finances and establishing business credit. In order to qualify for this type of loan, the issuers generally look at your personal credit score. Most of these credit cards also have added bonuses of rewards and sign up bonuses.

A valid tip is to choose a credit card with about 0% introductory financing offer. This will allow you to make purchases and carry enough balance for about 9, 12 and even about 15 months without worrying about paying interests while your business moves.

5. Personal Funding

Personal funding is also a viable option, and this is why it is here on this list. However, using personal funds is more like a gamble. You will have to complete a solid job of first calculating all of your costs, so you will not run out of money and you will need to do a good job to calculate all your costs to be sure that you do not run out of money even before the business can support itself.

Read more: Personal Loan and different ways they can help us

Even if you consider using personal funds to begin, it is advisable that you first take some steps to establish your business credit in the right way. Doing so should leverage your business credit and you can access more capital in the days to come. This way, the business will also be able to stand well on its own without any credit and co-mingling personal assets.

This type of funding refers to seeking the help of family and friends to borrow some loan for your business. However, a downside is that it could affect your relationship with them, in case you are not able to recover the money and pay them back on time.

Small business startup loans are good for small businesses, provided you know all our options. Go through these and choose the best one that fits your startup needs.