Starting a business here in the country is quite simple. If you have an exceptional talent or skill on hand or a brilliant idea that you are confident of monetizing, you could use your savings, raise funds from friends and family and/or even get a Business loan from banks or other lenders to start your own business.
You would need money to start your own business, invest in real estate, cover everyday expenses, stock inventory and pay salaries. Here is a guide to getting business loans to start your own business:
- Settle on a concrete business plan.
- Know about the equity you have on hand to invest from your own savings/personal fund
- Make a list of how much money you would need to borrow and at what intervals.
- Estimate your sales volume, profit margins and repayment capability.
- Go online and do a thorough research about the various kinds of loans available for you and which one is most appropriately suited for your kind of business.
- Compare the loan amounts, interest payable, loan term, and penalties (if any), payable to different lenders.
- Calculate the long-term costs of loans as opposed to short-term loans with higher interest rates.
- Read through, and fill in loan applications thoroughly.
- Understand the rules and stipulations regarding repayment of your business loan.
- Gather all required documents required for the application of a loan.
- Make sure you have collateral to show against the business loan you intend to apply.
- Check your personal credit rating and CIBIL scores to ensure they are very good, and acceptable by banks. This is because a higher credit score, will earn better loan terms and lower interest rates.
Some of the best business loans are available from the following places:
- Accion
A direct lender, offers between $300 – $1,000,000.
- Funding Circle
A peer-to-peer loan that gives between $25,000 – $500,000 as business loans to start ups having a good credit score is popular for its excellent customer service. This has a fixed 3, 5, or 7 year repayment period.
- Kabbage
A direct lender gives speedy loan approvals for business loans between $2,000 – $250,000 and offers a flexible line of credit.
- Lendio
A lending marketplace, a matchmaker who brings lenders and borrowers together for quick funding and secures business loans between $1,000 – $5,000,000.
- OnDeck
Also, a direct lender best suited for businesses with strong cash flows provides loans between $5,000 – $500,000 and is advantageous for businesses taking out multiple loans.
- Small Business Administration
SBA Business loans are for people with good credit scores and a solid business plan, and not needing money immediately. With a simple application process and a maximum loan limit of $350,000 for a 10 year loan term, the SBA demands very little documentation. But this Business loan is not suitable for start-ups.
- Micro Loans
Non-profits offer up to $50,000 for small businesses started by minority, women, veterans or others. This business loan is best for those looking for a small loan with low interest rates.
- Secured credit cards or business credit cards
These have a high fee and interest rate than normal ones and is an expensive way to finance your start up business. This is good mainly for those who are disciplined at repaying debt and are looking for a quick access to funds.
- Personal business loans
These loans are an option when you start your own business and need only a small business loan of up to $50,000. Personal business loans are safest for people with a good personal credit score of over 600-650.
- Equipment Financing
This provides business loans to start ups who need to purchase equipments that is useful for the long term. Spreading out the cost of equipments is a good way to not lock up a staggering sum of money in the business initially.
- A business line of credit
Especially suited for people wanting to start a business and are looking or quick funding between $5,000 – $150,000. Although this works like a credit card, it has a lower interest rate than a credit card.
Crowdfunding, borrowing from friends and family, small-business grants from private foundations and government agencies, ROBS financing for those willing to risk retirement funds, Venture Capital and Angel Investors are other ways of obtaining business loans to start a new business. If you are new in the business scene, first learn how to start a business, then make a solid plan of action to run it profitably. Also, compare business loan options and weigh the pros and cons of the same before you make a decision.
