A startup business loan is a form of funding available to startup companies with little or no previous credit or business history. While term loans and U.S. Small Business Administration (SBA) loans are the most frequently mentioned types of startup loans, companies can also use business credit cards or asset-based financing.

Starting business owners can use the financing for various purposes, including buying machinery, supplies, inventory, and furnishings. New businesses may also need to acquire construction equipment or real estate.

What You Should Know About Startup Business Loans

Startup business loans are intended to provide financing to new businesses. The cost of a startup loan for a new company might range from $500 to $750,000. The terms might range from 1 to 5 years. You may need to show evidence of a solid business plan if you’re looking to obtain financing on the higher end of that spectrum. Be prepared to explain how and when you plan to generate income and how you will stay ahead of your competitors.

How Can You Determine How Much You Need?

Think about all the things you may need the financing for. Decide if those items are non-negotiable and if so, be ready to explain why. Although having a financial cushion may be a good decision, avoid borrowing a lot of money you don’t need to start your business. That way, you can escape financial strain and consequences down the road.

Startup Business Loan Benefits

One of the key benefits of a startup loan is that you don’t have to give up any stock in your firm as a business owner. This implies you can still own the same percentage of your business as you did before you took out the loan.

Making loan payments on schedule can put you on the right track toward having good company credit. A high credit score might increase your chances of obtaining business financing you may need in the future.

Things to Keep in Mind

While this isn’t always the case, you may find yourself getting a higher interest rate for your business startup loan than an existing company would pay. This will be determined by different elements, including your credit score.

Furthermore, your startup financing may require a personal guarantee. That implies you’ll be accountable for any obligations and costs, as well as being liable if the loan is defaulted on. Also, depending on your circumstances, you may need collateral.

POM Capital & Funding Services can Help with Your Startup Costs

If you are interested in a startup business loan and would like to discuss your business funding options with an experienced broker, call POM (Peace of Mind) Capital & Funding Services at (631) 354-9290 or write to us at [email protected] to schedule a free consultation with our team.

POM Capital & Funding Services is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.