Today’s Top Lenders for Small Business Startup Loans

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What is a Startup Business Loan?
Small Business Startup Loans: Our Top Picks
Types of Small Business Startup Loans
1. Term Loan
What Is a Term Loan?
Why Choose a Term Loan?
Keep in Mind
2. Business Line of Credit
What Is a Business Line of Credit?
Why Choose a Business Line of Credit?
Keep in Mind
3. SBA Loan
What Is an SBA Loan?
SBA 7(a): With a standard 7(a) loan, you can borrow up to $5 million for your new business. The application review time for a standard 7(a) loan is 5 to 10 business days. If you need capital sooner, consider an SBA Express loan, for which the SBA will review your application within 36 hours of submission. With an SBA Express loan, you can borrow up to $350,000. Microloan: Through the SBA's Microloan Program, you can borrow up to $50,000 from qualified nonprofit microlenders.
Why Choose an SBA Loan?
Keep in Mind
4. Equipment Financing
What Is Equipment Financing?
Why Choose Equipment Financing?
Keep in Mind
7. Invoice Financing
What Is Invoice Financing?
Why Choose Invoice Financing?
Keep in Mind
How to Get a Startup Business Loan
How Much Funding Will Your Startup Need?
Do your research. Learn about the types of expenses your kind of business usually incurs, compare vendors for those expenses, determine reasonable pay for workers, and learn anything else you may need. Talking to other entrepreneurs may help. List all your business expenses with their estimated costs. Examples of costs are rent, utilities, permits, inventory, payroll, insurance, marketing, and office supplies. Separate your expenses into one-time and monthly expenses. One-time expenses are directly related to startup costs, while monthly costs are recurring items like rent and utilities. Having two lists will help you understand what you will need to budget for each month. Add up both one-time and monthly expenses to estimate how much funding you need to kickstart and maintain your business.
Applying for a Startup Business Loan in 6 Steps
Choose the type of loan that fits your startup's needs, considering the costs you calculated in the previous section. Decide which type of lender is right for your business. Options include: Private/online lender Bank Credit union Peer-to-peer network
Determine what you qualify for by checking your business and personal credit history against different lenders' minimum requirements. Prepare documentation like bank statements, legal documents, and business plans. Lenders will likely need to review these. Compare small business lenders. Apply for the small business startup loan or loans that best meet the needs of your startup.
Qualifying for Small Business Startup Loans
Business plan: Your business plan shows lenders you know what you're doing and how you're going to succeed. Credit reports: Lenders typically look at applicants' personal credit reports when determining if they want to lend them money to start a business. The higher your personal and/or business credit, the better your chances for obtaining a small business startup loan, credit card, or line of credit will typically be. Legal documents: Prove your business is legitimate by providing licenses, registrations, franchise agreements, or other documentation you have had to finalize to open your business. Tax returns: Sharing your tax records and other IRS-related documents for a minimum of two years not only makes you look prepared but may be required for business registration.
Startup Funding Options if You Have Bad Credit
Business credit card: A business credit card allows you to make purchases for your small business and make payments monthly. Crowdfunding: Crowdfunding allows small businesses startups to raise money via small investments from individual people. Family and friends: You can ask people in your personal life for help funding your business. Microlenders: These lenders typically offer smaller loans and may be easier for startups to qualify for. The SBA has a microloan program that offers loans up to $50,000 through nonprofit, intermediary lenders. Private investors: Some individuals invest in small businesses and startups. Angel investors are often particularly desirable, as they have high net worth and may cover a good amount of business costs. Small business grants: Small business grants are free money offered by private foundations, government agencies, nonprofits, and other sources that support mission-focused startups and individuals. Venture capital: Venture capital comes from a pool of investment dollars offered by corporations, wealthy individuals, pensions, endowment funds, or other investment firms. Venture capitalists or firms take a stake in your small business and/or join your board of directors.
Building Good Business Credit
Making your business legal: Select a business structure (such as an LLC, LLP, or corporation) that aligns with your business needs. For more information on choosing a structure, visit the SBA Business Guide.
Getting a Federal Tax ID Number (EIN): Use this when filing company tax returns, opening bank accounts, and submitting business loan applications. Opening a separate business bank account: Doing so keeps your business and personal finances separate, which may help when you apply for loans. Building credit with vendors: You can apply for net terms that allow your business to buy supplies on credit. These purchases and payments are typically reported to business credit bureaus, which in turn, can help build your business credit profile. Regularly checking business credit reports: Pay attention to whether there's any outdated or incorrect information so you can update or correct it to help maintain good business credit.
Top Small Business Startup Loan Lenders: Methodology
Minimum credit score is 650 or below Minimum time in business is one year or less Minimum annual revenue is $100,000 or less No collateral required Interest rates start at 20% or below Maximum loan term is 25 years or longer Maximum loan amount is $500,000 or higher Simple application (online, no mailing or going into the bank required) Time to send funds is less than a week Whether it offers 24/7 support (online or phone) Special benefits/terms (if relevant)
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About the Author
Lantern is a product comparison site that makes it easy for individuals to shop for products and compare offers with top lenders. Lantern is owned and operated by SoFi Lending Corp., the digital personal finance company that has helped over one million people get their money right.
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