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The Best Places To Get a Business Startup Loan
3 Sep 2018

Business Financing 101- The Best Places To Get a Business Startup Loan

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Small businesses have added 1.4 million jobs to the job market.

Are you interested in starting a business but don’t know where to get funding?

Finding money for your start up can be a huge worry. Let’s look at business financing options for your idea.

Keep reading to learn how to secure a loan for your company!

business financingWhat Is Business Financing?

Business financing refers to when businesses gain funding to begin or enhance their current operation. Financing is typically used to purchase expensive equipment and real estate.

Its common to seek out capital, but sometimes the process isn’t always easy.

It’s essential for business folks to determine what kind of financing option they wish to pursue.

Either you will go for debt financing which means you will be borrowing money or equity financing.

Debt Financing

Debt financing is similar to gaining a mortgage or car loan. There will be specified terms and an interest rate.

Common types of debt financing are as follows:

  • Government loans
  • Commercial loans
  • Manufacturing loans

When partnering with a local lender, this is a straightforward process, and often you can gain better interest rates.

Let’s look at equity financing.

Equity Financing

This method requires the owner to sell a stake in the company for capital. This method gives investors partial say in how the company will operate as well as a certain percentage of future income.

Some business owners prefer this method of financing. If the business doesn’t do well, the capital will not have to be repaid. Some investors will need principal protection.

This means that the company will guarantee a specific return equaling the initial investment.

Commercial Loans

Commercial loans are a debt-based financing option between a lender and a business. Typically, it is used to cover massive capital expenses like inventory, equipment, or real estate.

For many businesses, it’s challenging to qualify for commercial loans because of the inherent risk, steep startup costs, and regulations that you must get through.

If you are interested in applying for a loan like this, reach out to your regional and local development authority for guidance, financing, and support.

Lenders will require annual and monthly financial statements as well as proof of insurance that covers your business.

To increase the chances that you can be financed, make sure you have a detailed business plan ready, a business debt repayment schedule, and financial statements prepared.

Here are some common commercial loans:

  • Line of Credit
  • Commercial Real Estate Loans
  • Equipment Loans
  • Short-Term Loans
  • Traditional Term Loans

Government Loans

The government has a variety of loan programs that will enable businesses to gain the required financing. Like commercial loans, businesses typically use these funds to buy equipment, real estate, or needed inventory.

Unlike commercial loans, government loans have more strict requirements. If your business will create jobs, boost human capital, and help rejuvenate an area, you are more likely to qualify for a loan.

Government loans usually have lower interest rates. This makes them higher in demand.

Common government loans are as follows:

  • Agriculture Service Loans
  • Business and Industrial Loans
  • Educational Loans
  • Housing and Urban Development Loans

Contact Us For Help

Business financing allows you to move forward with your business idea. We examined commercial and government loans in this article.

If you hope to apply for a loan but have a low credit score, contact us today and we would be happy to help you!