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Where to look for a business loan to push your startup towards success



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Where to look for a business loan to push your startup towards success

If you're just starting off, you'll likely need to have some sort of funding in order to build up your company.  Now, you may think you're just going to be a millionaire right off the start, but that's not likely the case because you don't realize how much work goes into a small business, so you might have to apply for some sort of business loan in order to get to the point you wish to be at.

A business loan needs to be paid off, for the most part, some are given with the idea you're going to help the world and create more jobs, but those types of grants are difficult to obtain since there are likely thousands of submissions for the same grant.  You should always apply for grants that don't need to be paid back before getting a loan that does, but you should always have a game plan for obtaining a loan, and below are a few things to think about when it comes to that loan you need.

SBA gives out loans, sort of
The SBA doesn't really give out direct loans, instead, the work with partner lending companies who give out the loans and they agree to abide by the guidelines set forth by the SBA.  It's not super difficult to get a loan through the SBA partner companies, but you need to abide by all the guidelines and have all your documents at the ready for the application process.  Not only does the SBA have great loan rates that are very competitive, they have a vast amount of information that could help you throughout your journey.

A nonprofit microloan
These types of loans usually fall in the range of $500 to $50,000 and you might not have to pay any interest on the loan you get.  Usually, the amount of the loan and the interest on it depends on how much you need.  Some companies will give you $10,000 and not charge you interest, but if you needed $15,000 you might be paying a 5% to 9% interest rate.  So know exactly how much money you need as a loan and it could actually save you money in the long run because you might not have to pay any interest on the loan Where to look for a business loan to push your startup towards success

Give away some equity in exchange for funding
There are some platforms out there that will give you the amount of funding you're looking for, but they will ask for some equity in exchange for their money.  These types of investors will become your partners, and they likely won't tell you exactly what to do with your company, but you can always tap into them and ask questions.  Now, if they're giving you hundreds of thousands in the beginning, they might become a partner that you need to listen to.

Get a business credit card
One of the easiest ways to obtain funding for your business is to just get a business line of credit.  The amount you get will be determined on how much is actually in your account and how much cash flow you have.  If you have $10 in your account and only $1,000 flowing through it each month, don't expect to get anything higher than a $2,000 line of credit.  On the other hand, if you have $100,000 in your account at all times and there's much more flowing through, you may get a $500,000 line of credit to boost your company.

Rollover Business Startup (ROBS)
If you have enough money in your retirement fund, usually $50,000 or more, you can try a rollover for business startup.  This will allow you to start your company without having any sort of debt attached to it, which can be a great thing to start with, but you'll need a few things to get this going.  You'll need a lawyer and an accountant who can help you through the steps it takes to transfer your retirement funds to a new 401k in your company's name.  This money will then be used to purchase stock in your own company, and then it will be sold, and once it's sold you will have the funds to start your business.

Get a personal loan for your business
If your credit score is above 580, which isn't a difficult thing to do, you can usually qualify for a business loan on your personal credit.  The problem with this type of funding is it's tough to keep your personal and business finances separate and these loans usually cap out at just $40,000 which might not be enough for some people.

Apply for a business grant
Everyone wants to get a grant because it doesn't have to be paid back.  The one thing that comes with a business grant is that you need to agree and follow some stipulations in order to actually get it.  You could get a grant to buy product or equipment to help your company out, but you won't get one from the SBA to simply start up your company, but if you look near the top of this discussion you'll see how you can actually do that Where to look for a business loan to push your startup towards success

Get a home equity loan
If you don't have a business history or a very good credit score, but you have a home, you can apply for a home equity loan and see if you can acquire enough funding to run a new business you wanted to set up.  These loans are easier to get because you're putting your house up to get the loan, which means you'll likely lose your home if you fail as a business owner.  The bright side of these loans is they have lower interest rates and a quicker approval process so you have your money in a shorter timeframe and you don't have to pay as much back as other conventional loans out there.

Use your own equipment to gain financing
Do you already have a business that uses plenty of equipment?  You can likely get a loan by putting those piece of equipment up just like it were a home equity loan, but with machinery.  A lot of construction companies, lawn care companies, and essentially anything with machinery or vehicles will go this route because it's easier for them.  Depending on your situation, you could likely go through Wells Fargo and get up to $250,000 which needs to be paid back within 6 years.  That means you would need to pay back $3,472 a month for the next 6 years just to break even, and that's not even including the interest rates.

Tap into your friends and family
This isn't the best way to go about getting funding, and that's why you should think of it as a last resort, mainly because if you screw up you won't be able to pay anyone back that you are close with.  You could essentially be ruining friendships or even divorcing your loved one because it caused too much of a strain on your relationship.  On the other hand, if you have a wealthy family or friend who doesn't mind investing in your business idea, hit them up for some cash and be successful!


In conclusion
A lot of businesses need funding, in the beginning, to be successful later on.  It's difficult to bootstrap everything and push your website to the top of your industry, and that's why there are so many ways to acquire funding from lenders.  They know you have a decent business plan in place and you will pay them back when you're successful, if you don't pay them back you could lose your house, but that depends on what type of loan you're actually getting.  Loans tend to come with interest rates, so be sure to shop around, or you can get a grant that usually doesn't have to be paid back but has to be used for specific things like purchasing goods and new equipment for the business and not just starting one up.


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Thanks!

Tommy Carey

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NesMarcos

There are a lot of choices when thinking of where to get loans for funding a business. Bank loans are the best because they give smaller interest rate however, you need to have some collateral and basically not a good idea when you missed paying it. Make sure that everything is well planned before getting a loan.




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cmoneyspinner

Oh man! Reading your discussion and I feel like I'm talking to my husband when he wanted to get started in a business. A few of your tips are tried and true. I know because he tried them. When it comes to funding and finance, get creative! The money is out there. There are even some celebrities who are looking to invest. Why not try to sell them on your business idea? Nowadays we've got social media. These folks are within reach. You can approach them. In fact, I remember a report where it was the celebrity who actually contacted an individual because he read one of their tweets. Who knew that would happen?




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amelia88

That's such a good point about social media - it's easier than ever to be able to connect with people who do have the big bucks already! If you have a product or service that you think a celebrity might believe in, it doesn't hurt to try and reach out ...what's the worst that's going to happen? They might say no, but they might say yes!




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Corzhens

We have a friend who is a celebrity and she told us that she wanted to invest in a business but she has no idea. Much more to compound her problem is the trust that she would give to the business because it is prevalent here to be scammed even by friends. Celebrities have the money so if you know how to persuade them for the investment then you can be getting a lot of investment money.




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fishbate

True. in social media there is endless opportunity. It all depends on how you initiate and approach the situation. The fact is many people see the potential but doesn't know how to deal with it. Its probably because they stop trying even before they started.




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amelia88

Money definitely talks, and knowing how you’re going to finance your business (and pay any loans back!) is important. Your list is a good reminder that there are lots of avenues where you can get funding from if you need it.




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stbrians

Loans go a long way in putting a business on course. It is normally a problem when it comes for repaying the loan. At times the business may not perform well.

However a trial is good. You set out good borrowing avenues.




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fishbate

I think loans are good for expansion and when your business is established. It maybe hard for beginners specially when they still have to work on their market. Although there are successful businesses that started through loans, i think it's more safer if you have an initial investment for a startup, this way you can analyze your results and then decide if a loan is still manageable.




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Kakashi2020

Banks and financial institutions are one of the best choices to get a business loan from. But normally you need some kind of equity to get one. Another way to get quick funds for your business is by applying for a business credit card which doesn't need any kind of equity.




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Martinsx1

The safest way to secure loans or financial aids to set up your business would be sourcing funds from your close friends who have the power to provide you with the money you need to begin your business. They are the ones that would provide you with the fund without any added pressure. If you get a loan from banks, the pressure to pay back with interest will worry you till you get to pay it back.




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fishbate

Yeah you have a point there, it may be a make or break if you try borrowing money from a family. I guess it depends on the agreement or contract. At the end of it all, paying what you owe is the best thing to do.




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centurion

To take loan and to give loan is not my characteristics. I take loan without % some times from my friend circle and if my friends face any trouble about business or personal purpose than also I like to provide loan. Now a days to meet the requirement with credit card worldwide is very much popular. I am a from a third world country and here minimum 50+ banks are available and they all provide credit card facilities (In some cases 0% interest rate if the monthly fill before a fix date) and I support this facilities.

Basically for starting a business to get a financial partner is the best luck in this world.

Thanks
Centurion




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vinaya

I started my brick and mortar business from a bank loan. Since my business was a legal entity and it was already working for some time, getting approval for a bank loan was not difficult. Getting a bank loan can be difficult because you need to give a collateral. There are many microfinance companies in my locality that even do not ask for collateral.
As for my online business is concerned, I borrowed from a friend for a low-interest rate




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Martinsx1

Borrowing from banks is good as long as you have the collateral and papers to use and secure the loan. One thing that I have come to understand about getting bank loans is that banks find it easy to give loans to people that have been in business for over the years because they will study the business and see the chances and possibility of getting their money and interest back unlike a new business that is yet to have any business history. So, I believe that it was the reason why you got your loans easily from banks.




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vinaya

If you are applying for the first time and you do not have a long history in business, it will be difficult to get a loan from a bank. However, if you are a returning customer or have been doing business for some time, you can easily gain trust. In order to apply for a bank loan, you must be a legit company and you also need to have all necessary papers associated with your business. Most of the banks have flexible payback system, therefore, getting a bank loan for your business is a good idea.
If you micro finance loans are a lot easier than a bank loan. However, micro loans have a higher interest rate, at least in my home country.




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overcast

The issue with the loan from bank is they need collateral. And they also need a lot of documentation and references on that case. So you should be going for something better in case of building the startup. I'd say on that note it helps with the startup building the right way. And you should be properly planning on that if you know how to as well.




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vinaya

It is true that it is difficult to get a bank loan, however, your loan is approved, you will never have shortages of financing. Banks also charge low interest rate compared to other financial institutes. I got a bank loan for my brick and mortar business. I am paying 9 percent interest rate. If I had burrowed with other financial instutions, I would be paying at least 15 percent interest.




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overcast

I agree if it gets approved then you'd be in better hands. But the thing is that often people need a lot of collateral for the same. You can see that pushing the startup for success is going to be even harder. And some of the time it may not be that easy with the startup loans. I guess we learn from the local bank policies and then we have to make decision.




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vinaya

Choosing a right financial institution for investing in your business is very important. Some financial institutes are notorious for increasing the interest rate every 2-3 years. This will hurt you if you have a long term loan.
The best way to start a business is by investing your reserve funds. However, this is not possible for many people because they lack in funds.




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overcast

I agree. The rate is not often locked in. And that means you have to understand that some of the time banks need to have some sort of interest rate lock in. And that means the banks have to find out proper funding option that they can work around with as well.I guess it works on that basis in that case.




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fishbate

Its a good strategy to find means of fund anyway possible, without or low percentage rate you can have an upper hand because you have all the funds purely for business. Its hard to start a business where your income is not yet established but you are obligated to pay.




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Martinsx1

There are so many options to seeking for loans when you seriously need money for your business but the underlying importance is to get a loan that you would be able to pay back as and at when due because with the interest keep growing isn't going to be good for you or your business as the debt might eventually make you lose your business which you worked so hard to set up from scratch and manage.




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vinaya

I think the OP missed one area where you could get funds for your business. You can also finance your business through crowdfunding. You can try crowdfunding site like Kiva, GoFund etc. A good way to get started with crowdfunding is create a campaing on GoFund and reach your friends and family. Sadly, I cannot use GoFund or any other crowdfinding site because the service is not available in my region.




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ajahcuizon

Getting loans for business in indeed a grat idea and should always consider of those who wants to build up a business. Building up a business is not easy. It needs a lot of attention, passion and money. That is why getting a loan would be the greatest way to start up your business. On that way, you could save your own money and use the money from your loans instead for your business. Good thing that there's a blog about this which is agreat big help for those people who wants to set up their business.




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vinaya

You should get loan only when you can pay back. There is no gurantee that your business will succeed, you might end up paying from your pocket. Therefore, you should only invest when you can afford to lose.
Contrarily, if you start your business from your reserve funds, you will not have any financial obligations.




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jaymish2

I never knew that they were so many avenues. Most people have to borrow to start their businesses. I am currently looking to startup with the lowest start-up costs ever. In my Country credit is one of the most expensive in the world. The interest charged is really high, and this will eventually affect your business because you will have to charge your customer high prices so that you can make the repayments. I like the fact that you can borrow money on your machinery.I would go with that, but starting a business with borrowed funds is not the easiest and smartest thing you can do.




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overcast

For me based on my banking history, it may not be possible for me to get the loan. Also the credit card won't be possible either. So anything I do is purely based on my own work. And that is what is making me money. And that is one reason loan is not possible. So it;s always recommended that we should be making the choice for getting the loan at proper time. Otherwise it becomes harder from what I have seen.




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treecko142

Loans are a big part of how usual people start their business so it's important that people not fear of having to take out a loan to start a business. It is important to have a contingency plan though when the business doesn't work out so you don't get to fall deep in debt, and also take smart loans rather than borrowing money left and right.




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Youngshark

I find it it easy to rely on friends and family as sometimes they will easily sympathize with your cause. They are easy to rely on as one will get less conditions and requirements to abide with. Such funds will howver not be available at each and every time when you need them. It is at such moments when the other choices are applicable.




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Kakashi2020

Basically you can't start and operate effectively a business if you don't have or if you're short in capitalization. The easiest way of getting enough capitalization is to get a partner or incorporator that can help finance your company or convert some assets into cash by either selling it, mortgaging it or making it a collateral for a business loan.




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fishbate

A partner is a good idea to have a business running without having to much problem on both management and fund. But i think it all depends on the agreement your in with your partner. It's wise to have a well settled agreement before starting a business with anyone as a partner.




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vinaya

You have a point. If you finance your business through a loan, you will have to pay back no matter whether your business flourish or makes loss. However, having a partner as a financier is a good way to get started with the business. For instance, if you need funds, you can sell some percent of your shares to an investor. In this way, you will have the necessary funds for your business and even when you make a loss, you will not have financial obligations.




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aeon

Starting your business with a loan I think it's not good idea. Better to start your business with your own money, and if there's a potential then do this loan because you already earning from your business and you can now set up a goal how to pay your loan based on your profit from your business.




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vinaya

What if you do not have a reserve funds? How could you start a business?
Loan for your business is a last option, however, sometimes it becomes a necessity.
Starting a business entirely from a loan may not be a good idea and the best option is starting through your savings and then when your business picks up and you need more funds, you can apply for a loan.




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aeon

Better to sell the possible asset you have to earn the capital you need, I think better to start that way or start on the small capital. But if you really think there's a big potential on your business, why not. I just don't want to start the business with a big pressure.




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Youngshark

Yeeah I also have the same mentality. Taking a loan to start up a business will always wnd badly. It is better to hussle off when starting up but after achieving success then take a loan. The idea would be peoven and it is only proper to take a loan to scale up.




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aeon

Yeah, it's really hard to sleep at night when you have that situation. Although, even we should always think about the positive things, we should also face the reality. Better to sell all the things you have to get the capital.




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Corzhens

My husband’s brother availed of a home equity loan by using the home of their parents. It didn’t look good at first because the property’s title had to be transferred to my brother-in-law. But it worked well for the business of importing special steel from Japan. In a span of 6 months, they were able to pay off the entire loan and purchase 2 vehicles for their booming operation. It would have been better if he has a home of his own to use for the home equity loan.




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Kakashi2020

In other countries Kick Starter programs can really help finance new businesses. But in some like here in the Philippines it's not effective. It's because at the end they'll just help you process a bank loan.




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superlicca

Encouraging your friends or family to invest in your business is a good idea. Since they already know you, getting their trust can be easy. Try also to attract other investors who might be a partner in your business. I think applying for a bank loan is not recommended for beginners since there is an interest. And you will have a hard time to get their approval because banks are more willing to lend their money to the business that has been running for years.




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anchoreztin

Laat year my husband and i saw a very good potential at a particular business in our area. We did a feasibility study and the result is so positive. I would like to add that when you are looking for a business loan, try making a very good feasibility study that shows that you can pay for the loan. A good feasibility study allows you to gain more trust and more institution to are willing to offer you loan.




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esteban123

It is really a fact that when we are to start a certain business is that we need a lot of money or capital to raise them. But sometimes seeking financial loans is really difficult especially if you lack some properties to backup your loan and to serve as a guarantee so that you can immediately get a loan but there is a risk of having a setback if in case you can settle your dues. Having a bank loan is the fastest way for me to acquire a funds for a certain business but we must only see to it that we can pay on time to avoid any problems later on.




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jeffreyjose48

Its so easy to apply and get loans. The problem is paying all the loans if you don't have enough finances. I believe its much better to loan from family and friends because sometimes they don't ask you to pay for interests.




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romyter013

Its great if you can start a business with your family member but it always starts with the discussion on where they get the funds or where they can loan money. It s true that you don't have any options anymore you will try to asked everyone of the family if you can borrow a specific amount so you can start the business. Not really all will help you when its about money maybe because some are really don't pay back or really never pay back. So if something you borrowed even a small amount of money, learned to returned it so you will gained the trust of the person in times you need them.




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oneiljohn

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