Today’s Top Lenders for Startups
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Small Business Startup Loans: Our Top Picks
Types of Small Business Startup Loans
1. Term Loan
2. Business Line of Credit
3. SBA Loan
SBA 7(a): These loans are the SBA’s primary form of financial support for small businesses. 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 the capital sooner, you may want to 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 non-profit microlenders. You can use a microloan to fund your business’s working capital, machinery and equipment, inventory and supplies, and furniture and fixtures. For more information on SBA microloans or to find a microlender in your area, contact your local SBA office branch.
4. Personal Loan for Business Use
5. Business Credit Card
7. Small Business Grants
Guide to small business grants for women Guide to small business grants for veterans Guide to small business grants for minorities
8. Venture Capital
Applying for a Small Business Startup Loan
List all your business expenses with their estimated costs. Some examples of expenses 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 on a monthly basis. Add up both one-time and monthly expenses to get an estimate of how much funding you’ll need to kickstart and maintain your business. Choose the type of loan that fits your startup’s needs, keeping in mind the costs you calculated in the previous step. Decide which type of lender is right for your business. Options include: Private/Online lender Bank Credit union (This is a non-profit, communal entity made up of members who can contribute and borrow money from each other. Credit unions tend to have more favorable loan fees and better customer service than banks.) Peer-to-peer network (This is a service which helps investors and borrowers work directly with one another) 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 in order to make a decision. Compare small business lenders. Apply for the small business loan or loans that best meet the needs of your startup.
Qualifying for Small Business Startup Loans
Startup Funding Options if You Have Bad Credit
Private investors Microlenders Crowdfunding Family and friends Grants
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): You will use this when filing company tax returns, opening bank accounts, and submitting loan applications. Opening a separate business bank account: Doing so keeps your business and personal finances separate, which may help when you’re applying 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 Picks 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 starting 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 funds is less than a week Whether it offers 24/7 support (online or phone) Special benefits/terms for the interest group startups)
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