Business is all about taking stands. No matter how long you have been in a business, you can’t always make the right decisions. When your decision is based on an incorrect assessment, sometimes it leads to a financial disaster. Such situations are particularly worrisome for startup owners because they operate in a tight budget.
This is just one aspect. Depending on your business, the financial ups and downs could take many forms. Whenever a business goes cash-strapped, no security business loans are typically the first thing that comes in mind. Startups are no expiation. So here are some of the finest loan options for startups:
1. Equipment Financing
If you are about to start your business from scratch, you will need the necessary equipment. You must have them in the office the day you inaugurate your startup. That’s where equipment financing can rescue you.
Equipment financing does not drastically differ from traditional loans. From rates to repayment terms, more or less, everything remains the same between the two. If you have previously taken some type of loan and enjoy good relationships with a bank, it could be the ideal place to apply for equipment financing.
Make no mistake, and the sanctioned amount can only be spent on buying stuff like computers, cash registers, machinery, etc. In case of default, the lender can sell the equipment and extract the remaining amount.
The standout feature of this loan is that lenders don’t heel-drag the borrowers for lengthy paperwork. That way, you will have access to the money rather sooner than later.
2. Business Credit Cards
Business credit cards are one of the most popular options for startup businesses. Numerically speaking, as many as 59 percent of the small businesses use credit cards to cover their operational costs.
You can avail of the revolving line of credit through business credit cards. In layman’s terms, it will allow you to withdraw money whenever you need and pay it with interest at the end of every month. Business credit cards are also very handy at drawing a line between personal and business finances.
A healthy personal credit score is the foremost requirement to qualify for a credit card. Though the lender may not require you to put anything as collateral, the personal guarantee could be a criterion.
3. SBA Microloans
SBA microloans are designed to empower economically backward communities, minorities, and disadvantaged entrepreneurs. According to the definition of SBA, if you land in one of the above categories, you may be eligible to obtain 50000 dollars. More often than not, the lenders will offer easy terms so that you can assemble solid credit history and eventually stabilize your startup.
Besides, you will have the flexibility to spend the money. For example, you can utilize it t buy inventory, office furniture or other equipment.
4. Friends And Family
In America, a fair proportion of business is being run with the funding coming from friends and family. Unlike lenders, these people know you for years. If they notice the spark in your business plan, it will be hard for them to turn a blind eye.
However, everyone will not have an eye to see potential in your plan. So it will be futile to pitch it to all people of your inner circle. Make a list and single out people who can relate to your idea.
Final Thoughts
There is no question that borrowing money for a startup takes a lot out of you. However, it is by no means an impossible job. Many startup owners have done it in the past, and many are doing it presently. Before you lose heart, try out the above options. They could be the silver lining you are looking for.
