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Startup Business Loans – Getting Finance even with Bad Credit

Startup Business Loans for bad creditStartup businesses are challenging and the challenge is often the best part of owning a startup. One of the common critical requirements for most businesses is the source of funds. The availability of funds or the lack of it, can in many cases make or break a business and this is typically more so for startups. However, managing a source of funds for a startup business is not always easy. For example, even startup business loans are not the easiest business loans to procure. On top of that, if a business owner has a bad credit score, that can further affect the availability of funding options.

Many startup business owners think of loans as the holy grail to fund businesses beyond their personal finances. However, there are more options that one can consider, and loans are probably best once the business stabilizes. Why? Well, loans have to be returned in time else they can start to get quite expensive.

For this reason, despite us being a loan lending service, we shall start today’s article with discussing 4 of the best funding options for a startup business, beside the business owner’s personal finances.

4 Best Funding Options for a Startup Business

1. Crowdfunding

This is probably the right choice for any startup business that can get what they need out of it. Crowdfunding is a concept in which people, or the “crowd” contributes for a cause – which in this case can be a business idea. Crowdfunding works best for businesses that plan to do something that is very innovative or can work towards the betterment of life of people. Any concept that can be convincing for people to donate money towards it is probably going to benefit from a well-made crowdfunding campaign.

People with strong social following or PR skills can use crowdfunding even better. For example, musicians with huge social media followership numbers tend to attract great results if they choose to utilize crowdfunding. The best part – donators only expect non-monetary rewards, i.e. they do not expect money in return for their donation. Of course, not all start up ideas would be able to attract crowdfunding or even qualify for it.

2. SBA Loans

Loan schemes like the SBA 7(a) (Loan for Start-ups and Entrepreneurs) and SBA microloans are reasonably safe given the protective terms laid out under the schemes. However, any financial product comes with a risk associated with it. What makes SBA Loans also tend to have more affordable rates of interest and fees that are associated with them, when compared to most other borrowing options open to businesses.

However, 2 prominent factors make SBA loans less attractive for some business owners:

  1. It is not very easy to qualify for an SBA loan
  2. SBA loan approvals can take a long time and the processes may not always be easy.

3. Business Credit Cards & Line of Credit Loans

Business credit cards and line of credit are available from some banks and non-bank direct lenders. These work much like personal credit cards – a defined limit is made available and interest is charged as per the amount of funds actually used. They give a ready source of pre-approved loan amounts that the business can use as required.

Again, these are not very easy to qualify for, but once you do, there’s a fixed amount of time until when the available limit is yours to use. For start-up businesses, these loans tend to typically be approved based on:

  • Personal finances of the business owner(s)
  • Credit history of the business owner(s)
  • Guarantor(s) if any
  • Collaterals (in case of banks loans).

4. Alternate Business Loans

Alternate business loans are offered by non-bank direct lenders like us at BusinessCapitalUSA. Within certain legal limits, direct lenders like us have an option to be more flexible and offer loans with which higher risks are associated.

Alternate business loans, at the direct lenders, can be made available for businesses owned by bad credit score holders. In the case of start-up businesses, these might be the only such options available to most. The other advantage is that trusted and experienced direct lenders tend to offer the advantage of quick loan approvals and transactions.

However, with higher risks come higher expenses and that feature of the market makes these loans more expensive than the other choices mentioned here.

Alternate Business Loan for your Startup

It’s time for us to throw light upon our services. If you’re an owner of a start-up business, you can get a loan from us if your business has seen a smooth financial journey for as little as just 6 months. We offer alternate business loans which are approved quickly and subject to eligibility to our loans, you can get the funds you seek in as little as just 2 business days.

The application process is very easy. You simply need to apply online or call us at 800-821-6460 and we shall require a few basic details to start working with you towards a loan that suits your business needs.

Startup Business Loan with Bad Credit, No Collaterals Required.

Most startup business owners seeking a business loan while they suffer from a bad credit score, choose a trusted alternate business lender like us at BusinessCapitalUSA. The 2 biggest advantages we offer include:

  1. Bad credit score holders are welcome to apply
  2. No collaterals required for the approvals of your loan applications.

These along with the fact that we can avoid credit checks upon your requests, make our loans very safe for borrowers who have a poor credit history.

So why wait? If you qualify for our business loan, go ahead and drop a query through our online application form!

Figure Out What You Need To Help Plan Your Budget

It may sound very basic and simple, but first thing’s first. It is important to chart out your budget plan in an orderly manner to make life easy.

If you’re somebody who prefers doing things the traditional way then gather a couple of pens and notebooks for you to start writing a detailed your budget requirements in a detailed manner.

However, technology has undoubtedly made life easy for many in various aspects and a software like Microsoft Excel can be a user-friendly option. In fact, it may be a tad bit more useful than going forward the traditional way since saving documents on a gadget that is difficult to misplace- such as your laptop or computer- can come in handy.

However, the phrase “to each their own” does come into play here so it is important to choose a method that helps with your budgeting in the way that seems most convenient to you.

Make A List Of Your Costs/ Expenses

Once you’re ready with your tools, list down every aspect of running a business that needs investment, even if it’s something as basic or small as stationery. Prioritizing them from most important to most general can be a good idea. Some costs can be termed assets while the others can be called expenses.

Let’s have a look at your assets: These can include costs like real estate, furniture, gadgets, etc. Your assets aren’t usually tax deductible.

Let’s now take a look at what may be your expenses: Costs like payroll and rent/lease will fall under this category and are tax deductible.

Other costs may include those for your website, marketing , design, etc. that is a good idea to include in a separate list.

Figure Out Your Fixed Costs

Fixed costs are those that do not change on a regular basis because they do not depend on production and sales volumes. Things like rent or lease, payroll expenses, telecommunication expenses, advertising and marketing expenses, insurance, payment of subscriptions, etc.

Figure Out What Your Variable Costs Are

Quite the opposite of fixed costs, variable costs are those that fluctuate as per an increase or decrease in your levels of production. The best example of a variable cost is the raw materials that one purchases to run a business. Apart from that, a few other examples include sales commissions, electricity, direct labour costs (employees who work in the production unit and not administration or other departments of a company).

Monthly Revenue And Break-Even Point

Every business owner looks at earning a profit and if one doesn’t determine his/her budget and expenses appropriately then it can be difficult to achieve what one is looking for. After figuring out your costs, the next step is to estimate your monthly revenue and ROI in order for you to understand when you will reach a point when you start earning a profit. By figuring out your budget and investing it in the right areas, you may be able to reach your break-even point as per your estimation and desire.

Where Can You Get The Funds That You’re Looking For?

It is known that most start-up business owners have around $50000 or less in their bank account, which may or may not be enough to help fund their business. In case it isn’t, applying for a loan is the best way to go about it.

However, it may be a little difficult for an SME to get a small business loan from a bank which is why they can choose to opt for online business loans. Many online lenders offer amounts that are good enough to cover all your expenses and getting a loan from them is way easier than getting one from a traditional lender.

To start with, many of them do not consider bad credit as a reason to deny individuals a chance of getting funded by them. The requirement for collaterals is also not a part of their eligibility criteria which is a huge plus point considering the fact that most traditional lenders do ask for some kind of security in order to provide you with the financial assistance that you need.

However, the rates of interest of such loans may be higher that what may be offered by a bank, but the chances of getting approved and fast is also way higher.

By taking into account the factors listed above, you can plan your budget requirement in a satisfactory manner and understand what investments are most crucial for your business, at least in the beginning. For a start-up, you may want to consider putting a halt on fancy decorative items or other things that aren’t essential to avoid taking a bigger risk than is already involved in starting your business, but without a doubt, the decision is yours.

Take out a few days to figure out your costs and revenue and you will undoubtedly be good to go!