How To Qualify For A Business Startup Loan

Take a look at the top funding sources for startups launched in the US. According to data from crowdfunding platform Fundable, the most common ways to get capital include personal savings, friends and family, venture capital, and angel investors.

These are proven options for growing your young business, but not every entrepreneur can go down one of these routes. is needed.

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The problem is that start-ups often lack the business history and credit to obtain lucrative term loans through banks. If you find yourself in this situation, don’t panic. There are specific small business start-up loans that may suit your needs and goals.

Here are some notable startup loan products and the requirements you must meet to qualify.

1. Equipment Financing.

Equipment financing is a loan that allows you to purchase new equipment for your business using the equipment itself as collateral.

Equipment financing has many benefits, including:

• According to Section 179 of the IRS Code, interest and other financing costs are often deducted from taxes. Equipment depreciation is also available as a tax credit.
• Don’t wait to find extra money. This means you can get the latest equipment, from computers to industrial stoves to heavy equipment, use them to grow your business, and use the revenue generated by your equipment to pay off your loans. .
• Using the equipment itself as collateral, lenders are more willing to provide financing for new businesses. Fewer documents are required than a term loan.

Today, qualifying for capital investment typically requires a credit score above 600, $100,000 in annual revenue, and 11 months or more of business. If you’re just starting out, you may need a higher credit score to get approval from most lenders. Usually at least 680.

2. Business credit card.

Similar to personal credit cards, corporate credit cards can be used for revolving payments. This is when lenders offer maximum credit limits. Using your credit card to make purchases reduces your available credit limit. Once you make a payment, your credit limit will be restored. This provides continuous access to capital.

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A business credit card not only gives you secure access to funds, but it also offers many other benefits, including:

• Ability to build business credit. Make payments on time and keep your balance as low as possible. Your business’ creditworthiness may improve and more favorable financing products may become available over time.
• Separation of personal and business finances. Not only will this help you manage your company’s budget more effectively, but it will also keep you out of trouble with Uncle Sam’s tax season.
• More efficient financial processing. Most business credit card companies offer their customers powerful financial tools to track their spending, eliminating much of the manual work associated with bookkeeping. You can also control how employees spend company cash.
• valuable rewards. First, many business credit cards have lucrative sign-up bonuses. Plus, sticking with your card gives you even more perks, like cash back, free flights, and discounts on company products.
• Ability to save money. Some cards offer 0% referral APR over 12 months. This gives you the option to fund your initial business operations without incurring financing costs, as long as you repay in full at the end of the term.

Business credit card requirements vary by product and company. Of course, the best rewards, sign-up bonuses and referral APR offers go to those with the highest credit scores. The good news is that there are other solid cards out there, such as those that offer cashback or promotional APRs if you have a low personal credit score.

If you still can’t qualify, try a secure credit card. This requires a cash security deposit against a line of credit for the total available credit (usually about 90%, or all).

3. Credit line builder.

Building business credibility is important for most startups. This will give you better funding options in the future.

Join a line of credit builder. This is a non-traditional form of financing where you work with a financial company to apply for multiple business credit cards at once. The advantage is that you can save application time and get approved for a series of business credit cards. This raises the upper limit.

Additionally, the line of credit builder is a powerful tool for making your business credit look good. But to qualify, you need a lot of personal credit. A credit score of 700 or higher is usually required.

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Get your startup off the ground with a startup loan.

If you use these startup loans wisely, you will see your business creditworthiness improve over time. This could open up better financing opportunities, such as his SBA loan, which is known for its high prices and low interest rates.

From secure business credit cards to low credit, equipment loans and credit line builders, we have start-up loans for small businesses. Consider your options, do the math, and choose the products that can set your company on the right path.