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How to get a business loan for your online startup



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How to get a business loan for your online startup

When it comes to getting a startup loan for your online business, you need to understand you're in a competitive area since everyone is thinking the same thing, so you better have all the right information and amazing statistics to back up the need for getting a business loan.  On a brighter side of things, a business loan for your online startup can alleviate the pressure of figuring out how to make money right away to purchase bigger servers or bring on a programmer to get that one feature scripted up on your website.

Most online startups will need to be in business for a little while and show a positive cash flow before they think of applying for a business loan.  Would you give someone $10 if they said they would pay you back but they never had money?  Or would you rather give $10 to a person who usually has money and would likely pay you back?  That's what the bank thinks of in terms of your credit reports and the cash flow going through your business.  If it's all positive and they can trust you, you'll likely get a business loan, but the amount really depends on what you can pay back.  You'll never want to get a loan for $500,000 and agree to pay it back in 6 years if you're only making $30,000 a year with your current business model.  Now, if you were making $80,000 before you applied for the loan, you could easily live off of $30,000 a year and put the extra $50,000 into paying back the loan and that would mean any new profit goes right back into the bank account to build your business.  Eventually, you'll need to pay back more than $50,000 a year so remember how much you owe and what the interest rates are.

Always have a detailed business plan
When you're going into a bank or lending establishment, you will always want to have a well ironed out business plan as well as an exit strategy in order to show them you've planned for everything.  If you go in and say "I'm making $50,000 a year and need a $250,000 loan!" they'll have you escorted off the premises and ask you never to come back.  Ok, they'll really just sit you down and see what they can do for you, which will likely be nothing because you don't know what you want to do exactly and they can't assess your situation more than looking at how much money you have in your account at the time of applying.

You MUST have a good credit score
If you want the best business loan possible for your online venture, you MUST have a good credit score.  If you don't have good credit, you won't be getting any sort of business loan from any establishment, so be sure to work on your credit before you even apply.  I say this because you likely get one shot at applying and you need to make it count.  Sure, you could go in 10 different times and try to apply, but they'll remember who you are and see the difference between then and now, which might not be a good thing if nothing has changed.  So, build up your credit as high as possible before you even think about going for a business loan to fund your online ventures.

Have some of your own money ready to invest
Banks and lenders will look at what you already own, your assets, and determine if they can trust you with their money.  If you have a little bit of funding already that you want to use for the business, it will show the bank or lending party that you're serious about this venture and you're willing to spend your own money on it, you just don't have enough to do what you really want to.  A general rule of thumb is that you should have 30% of what you're asking for.  So, if you want a $100,000 loan, you should have $30,000 in your account and ready to purchase everything you need.  Save up your money if you haven't started already and then go apply for a loan when you have 30% of what you need to actually do what you want to online.  The good thing about an online venture is you usually don't need as much funding since you don't need to rent out any sort of office building in the beginning How to get a business loan for your online startup


In conclusion
Applying for the loan is the easy part of this entire process, actually getting the loan is the difficult part because you need to have everything just right in order to please the bank or lending establishment.  If you do have great credit, positive cash flow, and 30% of what you're asking for then you'll likely get what you want and be on your way How to get a business loan for your online startup  Just remember to pay them back in a timely manner so your credit doesn't suffer!


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Thanks!

Tommy Carey

Comments

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Youngshark

I love your posts great content as always. I like to have the mentality of going into the ground and getting the engines running first before seeking any loan. I mean there are no guarantees that what you want to do will work especially when it is a startup. However when you have started and are only going for a loan to scale up then you have the proof that you will make more money easily.




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Corzhens

There is no guarantee of success and getting into business is a gamble that begins in the start up. I had a failed business twice and I know how to fail. It’s not a joke but we can learn a lesson from the failure. For a start up, my advice is to have a capital that is twice the amount of your estimated amount. You can bet that what you had estimated will fall short when the business is already up and running.




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stbrians

A bank loan will go a long way to build up an online business. A loan is something good to take if you have planned for it and have a watertight repaying plan.

However, a good credit and business plan is necessary. Lack of these may not make you get a loan.




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Martinsx1

Getting a bank loan is not that easy. There are lots of requirements to be meet before getting a loan from banks. There is also the issue of collateral and interest on the loan. So, if you are not able to pay the loan as and at when due, it's going to pile up debt for you and you will most likely lose your collateral used to get the loan.




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Youngshark

This is why I tend to prefer a family or friends loan. They know you and will easily empathize with your cause to give you the funds you need. However in many instances they may lack the total finances that you may need.




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stbrians

It is true. There was a time I had wanted to get a loan from Kennedy Funding. The lowest amount of loan to get was so big that I could not meet the collateral involved. It was too much. They still sent me emails but I could not manage.




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Alymae

Yes. Getting a bank loan for business startup is hard. You have a lot of things to consider. It is almost impossible to get a business loan in your first year of business. You would have to rely on borrowing from family and friends, business credit cards, and micro loan from a non-profit lender. You might have a better chance of getting the loan if you have a collateral.




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overcast

At some point in the business you have to invest your own money. And you have to spend your time and also have to schedule things up. That's the way things need to be. And that's how you should plan ahead. Most likely some people are going to get the loan. And if they do get it they also have to plan about repaying that. In some cases that just does not work out for long term. But if properly done financing is not hard to get. You can approach the right places for the finances and make the business work.




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Martinsx1

Exactly! If you are not willing to invest your own hard earned money in your business project, I don't think that it's proper to look for business loan from another source to invest in the business. It's very important to start with your own earned money and know the pains of working to make ends meet with your own fund before looking at getting loan for your business. The only way one should look for loan immediately is when the business project is too big and impossible for you to have adequate fund to finance it, then getting a loan would be one's option.




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overcast

I understand that personal level like family and friends may not give the loan. But then in such case you have to go for other options. You can see that you have to invest into other means and places for the same. I have learned from the experience that some people can invest into the startups through angel investors and the VC money.




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Zelmontero

I am not fond of loans most specially if you have no stable income. Having debts will be a pressure for you. I agree that applying for loan is easy but actually getting the loan is hard. If you have do not have a very impressive business plan It is more likely that you will not be approved for loans. Just save more money before starting your business, it is a more good plan for me.




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RhealaineS

I agree with you. We need to be smart in considering whether we can handle getting a loan or not. Though getting a loan is a risk, we have to be good in calculating risks. Make sure that before loaning, you have various means of paying so that your name and reputation will not be tainted.




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Chinet23

I agree with you totally. You really have to weigh the pros and cons. Bank loans are no simple matter but sometimes we resort to them if we don't have the hefty sum our business requires. We need to make sure that we have means to repay it and already have a plan set out or else we're just getting ourselves into trouble.




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Martinsx1

Some people have strong avarice when it comes to getting loans or being in debt for one day. It would practically make them rattled and restless, so getting business loan for then is like getting into hot mess and it's going to affect the business in a very bad manner if you lack the clear head to use the fund efficiently and effectively. So, if one is among such category, it is important to stay away from getting business loan.




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Zelmontero

I definitely agree if this pressure and stress of loan is not your cup of tea you better avoid this plan right now. Do not engage in a responsibility that you can satisfy. You could go to jail if you can not satisfy your debts so its better to get your investment from your own pocket. It is much safer and wiser.




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anchoreztin

I agree with you that we should avoid loaning as much as possible. But when you sure that you are able to pay the loan then do it because in business, the right timing is always crucial. What if you have a good business plan or idea but it will take you many years to save for that business? Then the moment you have the money, somebody has already started that business. It will always depends.




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anchoreztin

I am sometimes a believer of getting loan because in business it is not always be just strategy and tactics but also the PROPER TIMING. What if you are faced with a very good business idea and this business idea very feasible during that time but you dont have the money? Would you let the chance pass by while you save up or would you get a loan while the demand and the potential for that business idea is still high? This is one reason why you should consider getting a business loan. Also I agree to your article especially the part where you should pay on time.




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Martinsx1

If you have a very good business plan and the timing is perfect for the business to be initiated at that very moment, then it's very important to seek for business loan and start out the business right away. But you should make sure that the business plan succeeds because it's not good to get a business loan and start trial and error to know if the business will click. It the business plan doesn't look feasible enough, it's better to save money and start it when you are ready in order to avoid getting into debt when the business goes haywire.




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Martinsx1

When you are looking at starting up a new online business, you must have a budget for your own kept for such purpose, because you can't start out immediately looking for loan to use and set the business up. It's more appropriate to have some money of your own and start the business, then look for loan to support your business and boom it up.




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Barida

This is true as having a budget of how you want to carry out a business is one of the best ways that you can start up a business. You should have some capital at hand that you can use to start up before you start looking for investors that will invest in the business unlike trying to start up the business from full capital of loans gotten from investors.




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treecko142

Always have a concrete business plan and research to back up whatever your profit estimates are to show that you know how to use that loan to turn up a profit. Most people just go in blind with a business idea but with no actual plan on how to implement their business.




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Barida

A business plan is like the foundation of every business and insuring that we have a concrete business plan that can be able to convince investors to invest in my business is one of the ways that we can have a successful company.




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treecko142

Yeah, investors really seek out the people who have a solid vision and projected growth for the company in the immediate future, because it shows that you as an owner have clear future targets and not just guessing about what to do along the way.




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Barida

Having a detailed business plan is one of the ways that you can be able to use the business that you are doing to source for loans and grants as the case may be. One thing that I have come to realise is that people that have a detailed business plan that be able to convince investors to invest in their business since the business plan will show a plan that have Good feature about the business.




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DenisP

While it certainly wouldn’t hurt to try and get a loan from a bank, we thankfully also live in age where crowdfunding is becoming increasingly popular. So many people out there have been able to successfully fund their dream companies all thanks to the support of people through sites like Kickstarter.

Not to mention small business owners/entrepreneurs now also have the ability to potentially be funded through sites like Patreon. That said, Patreon is definitely more of a small time thing for aspiring content creators to receive monthly funding from their fans.




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trixari

I haven't tried availing of a loan but thank you again for sharing some really helpful tips! I think sharing information like this can help reduce business failures. It's not enough that we are interested in doing business only, we have to invest in our knowledge too so that we'll be able to handle professionally whatever comes in our businesses' way!




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Zelmontero

Truly, knowledge is the the first thing that you should invest to. Being knowledgeable on the business is the best way to avoid unfortunate events in the future. Equipping yourself today will make you wise tomorrow.




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Corzhens

Over here, it is so difficult to get a business loan unless you have a big business to speak of. For small time businesses with little capital, it is almost impossible to get a loan from the bank hence those market vendors are the customers of loan sharks. Based on studies by government researchers, small business people turn to loan sharks because they are badly in need of capital and they may miss the opportunity if they wait for long. With a loan shark, they can get the money instantly.




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esteban123

I think that salary loan could also be another way in seeking a business loan if you are working in a government or private institutions. Although the amount would not as high as you expected but I think it is really good enough to start up a certain business. Aside from that, it is very easy to seek salary loan unlike in a bank loan that the requirements are really heavy and will takes a lot of time to be approved.




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ajahcuizon

Loans are big help for those people who are just starting to put up a business and the tips stated above are great when applying for a loan. I agree that you should have a good business plan for you to increase the chance to be approved for a loan. But you should control your desire of getting loan from different companies. Although they might be a good asset for your business, having too many loans could get your business closed because those assets might become debts. You should always remember to pay each in time to prevent overdue expenses.




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mitan143

I haven't tried to avail on any loans yet, but it is true that loans are very helpful for business aspirants. But personally, I'm still afraid to get a loan because I have what ifs like what if the business suddenly digs its way down to the point that it became unprofitable anymore and you don't have any left to pay back your loans. That must be a nightmare. I know that we should take a risk sometimes if we really need to achieve something and like I always remind to my self that you should be strong enough to face trials so you won't be eaten alive completely by your failure that makes other people go crazy and don't know what to do anymore.




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Gilgamesh

There are some several ways in loaning a capital for a business startup; majority of the bank, loaning app and some lending agencies tend to give a small amount of a desired value because those are the only once that they can afford especially into the suspicious individual who has an average rating of the record that presented into the company. I agree that loaning a huge capital is a headache into the applicant because of the complicated procedure that it needs to undergo, applying is very easy but it is a 50-50 chance for you to be approved. The aspects that you have presented is the major components that is been used as a basis of the bank or loaning agencies to track down the loyal applicants that can really pay the money back instead of running away.




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