What Are The Startup Business Loans That You Need To Look For And How Do They Work?
Starting a company is never easy. There are difficult logistical challenges that will require your constant attention, just to ensure that you start breaking even as soon as possible. On top of this, the financial aspect of running a business can be very confusing, especially if you do not have all the money that you need to get things started.
This is startup business loans come into play. These are great ways to get the financing that you need to start the company and generate enough profit to make the business self-sustaining. While there are dozens of ways through which you can get the money that you need, we will be looking at the most popular and effective ones.
It is important to keep in mind that each of these will suit a different type of entrepreneur, depending on the type of business, the amount of money required, and the actual business plans.
The main types of startup loans that you can use to create your company
While there are hundreds of types of loans that you can take out to start your company, most of them are difficult to access if you do not have any type of business history to back you up. Here are the main types of startup loans that you can access, even if this is your first company and you do not have any sort of experience in the field that you’re targeting:
- Small business grants
Small business grants are, generally speaking, free money that you can receive to start your business. These have almost no restrictions when it comes to the type of the company, however, they are somewhat difficult to get. This is because only a limited number of grants are offered every year.
This means that there is a lot of competition between entrepreneurs who are trying to come up with the most attractive business idea and the most comprehensive business plan. Generally speaking, the companies that have well-written, detailed business plans that can demonstrate that they will be successful and start making a profit as soon as possible. The businesses that have the least amount of risk are the ones that are selected to receive small business grants.
Microloans are immensely popular among entrepreneurs since they offer a fast and easy way to secure the capital needed to start a business. The loans can range anywhere from $50 to $50.000, making them a great choice for anyone who has a small idea that will work great at a smaller scale.
This having been said, it is important to keep in mind that these are not grans. They will have to be repaid and they come with monthly interest rates. However, if you are looking for a way to quickly get financing and your business does not require a large investment from the get-go, then microloans may be the way to go.
- Crowdfunding financing
Crowdfunding is a somewhat new concept that most entrepreneurs are not yet aware of. This financing method requires that you start an online financing campaign on a platform such as Kickstarter, and then try to convince people that it is a good idea to invest in your company. Once you get your campaign up and going, you only have to wait and see if you raise the amount of money that you need.
Keep in mind that although other individuals will be financing your business idea, you will not give away ownership of the company. Crowdfunding does not work like going public with your company. In most cases, companies will have to offer something to the users that kickstarted it, provided that the campaign is successful. For example, if you raise money for a company that will produce a certain type of product, once you get the financing that you need, you will have to send your kickstarters prototypes or finished products (or offer the items to them at discounted prices).
- Business credit cards
Business credit cards are the traditional solutions for new businesses, especially early on. They allow the owners to borrow money when they need it without having to go through endless meetings or pay high interest rates. It is also important to mention that business credit cards do not require any sort of collateral.
These are the best way to secure funding when you start a new company or immediately after you’ve done so. Each one of them is very easy to access, except the small business grants that are limited in number.
Keep in mind that although all of them can be accessed without having to have any prior business experience, they do require a well-made business plan. This is especially true if you use crowdfunding because those that finance you will need to see that your business is profitable and that they will get something in return for their support.