Do you have a business plan in mind?
Then, what is stopping you from realizing your dream business? Well, for most entrepreneurs, kick-starting a business is the toughest. The process of transforming the idea into a viable business model is critical and needs financing. For a successful business, both finance and time play a vital role. Although one may know that funding is critical for business it is also important to know the ways to get funds for the business. New businesses need reliable funding fast! And, that’s what we are here for. We offer a range of startup business loans so that you can launch your business idea now. Apply online today.
An established business firm has the benefit of existing lenders and a brand image which helps it to keep the business functioning. However, it is not the same for new startup businesses. For most start-up businesses generating leads to borrow money is like a nightmare. A start-up business loan could be of any type which helps in managing the activities of the firm yet it has reasonable terms. The loan amount can be utilized to either hire a good team, rent out office space, get required software or equipment, develop the product, or for purchases. Moreover, start-up loans are essential for businesses in the early stages or the ideation stage.
The types of start-up loans for businesses
Term loans are the most common types of financing options available for start-ups. It comes with a fixed tenure for repayment. There are two types of loans available that are secured and unsecured. For unsecured loans, the tenure is less i.e, 1 year to 5 years, and for secured loans, the tenure can be up to 15 to 20 years. The Loan disbursal occurs in a lump sum and is commonly used for capital expenses.
The start-up loans as the name suggests are specifically for new businesses. Since the businesses don’t have a brand image they lack credit history. Therefore the lenders offer the businesses loans based on their personal credit history. The loan amount will be calculated on the present situation of the business, tenure, and the applicable rate of interest. However, the business must be able to verify all the necessary documents like proof of business, registration documents, etc.
Working capital loans
In the event that the businesses need funds to keep the work running they require working capital loans. These loans help businesses to maintain their daily activities and help them to take care of operational costs. Some businesses face the crisis during the off-season or peak season as well, and these loans help them to overcome shortfalls during emergencies.
SME loans that are offered against property help businesses with high requirements. Here the businesses must mortgage the property to get the funds for business. The business can avail loans on residential or commercial property. The lending agencies offer up to nearly 70% of the market value however the title must be clean and must have no encumbrance. Also, the property must not be under any litigation. The tenure is usually long, ranging from nearly 15 to 20 years.
Business credit cards
Since start-up businesses need fast loans this would be an ideal financing option. It gives the business instant money to get the business in motion. The businesses get the finance for short terms. One of the benefits the businesses get with this type of finance option is that they can get rewards for on-time payments on the debt. The businesses can also avail benefits like introductory offers, insurance covers, etc however, the interest rates may be higher than usual.
Financing institutions offer overdraft loans on collaterals or securities for a fixed term. The lending institution approves an overdraft limit based on the credit history of the borrower, the repayment history, the revenue of the business, and the relationship with the institution. The borrower gets to utilize only the amount needed from the overdraft amount and can pay interest only for the amount used.
To conclude; lending institutions generally consider new businesses to offer loans although they don’t have business credit or good turnover. However, the lenders would check the personal credit history and years of experience in the industry to conclude the terms of the loan.