HOW TO GET FAST BUSINESS LOANS FOR STARTUPS?
A startup company (startup or start-up) is an entrepreneurial venture which is typically a newly emerged business which desires of a target market by developing a viable business model around a product, service, process or a platform which investors must be able to envision.
Early stage in the life cycle of an enterprise where the entrepreneur moves from the idea stage to securing financing, laying down the basis structure of the business, and initiating operations or trading is termed as a startup company.
Small business loans are used for business expenses. While some loans are for general business funding, other small business loans are for specific uses, such as working capital, commercial mortgage, or the purchase of new equipment or furniture.
Fast business loans are designed to meet short-term working capital needs that arise suddenly or unexpectedly. Maybe you receive a larger-than-expected order and need money right away to purchase additional supplies. Maybe you find yourself falling short on payroll and need money in a very short time.
Startups are eligible for certain types of fast business loans but typically won't be able to borrow very much. For larger amounts of capital, you should have at least 1 year in business and $2,500 in monthly business revenues. Getting a startup loan is much better than giving away your equity to investors or borrowing cash from friends and family.
Startup business loans are a great financing option if you don't qualify for other loan products. Fast business loans are typically classified as short term financing options with high-interest rates and a speedy funding, within1-3 business days.
If you need a loan to start your business, but don't have any valuable collateral to offer just yet, here are the loan products you should consider applying to:
1. Business Lines of Credit
Business Line of Credit is good for entrepreneurs with strong or poor credit, who want more flexibility in using their fund. A line of credit gives you access to a specific amount of money, you need not use all of it. Just pay the interest on the funds you draw, and once you have paid back what you draw, your credit line goes back up to its original amount.Lenders like Lending Club or Credit Junction offer low-rate lines of credit, but are harder to qualify for.However, if you have bad credit or are new in business, you should approach lenders like Kabbage or BlueVine.
2. Equipment Loans:
If you are in immediate need of an expensive equipment, but can’t afford to (or don’t want to) purchase that equipment up-front, equipment financing is the best option.Equipment financing methods include equipment leasing, SBA and other government loans, as well as sale-leaseback wherein the collateralized existing equipment to raise cash for additional purchases.Procedure to get equipment loan is least cumbersome as compared with commercial and industrial loans.
3. Invoice Factoring
If you bad credit but are in urgent need of fund to meet your present and immediate cash needs invoice factoring is a good option.
Invoice Factoring is also good for start-up firms facing a cash-flow crunch or slow-paying clients. With factoring, you can sell your customer invoices to so-called “factor companies,” that, after approving the deal and weighing the client’s credit, will deliver up-front payments against client invoices and account receivables, of up to 90% of the total amount owed by the customer. After the client makes the total payment owed, the factoring company remits the balance, and tags on a processing fee.
Furthermore, factors have a deep knowledge of specific industries and can help you in managing your accounts receivable and make sure your customers continue to pay regularly as well as promptly on each invoice.
Besides factoring does not create any supplementary debt, as factoring is not a loan, it is a purchase of your open invoices. You have the flexibility of choosing which invoices need factor.
4. Merchant Cash Advances
For start-up firms facing a cash-flow crunch or slow-paying, a merchant cash advance is another route to alternative financing. MCA’s are not a loan. Instead, this form of funding is deemed as the sale of a company’s future credit sales at a discount. By and large, merchant cash advances are short-term (usually 90 days or so), with regular, even daily payments made by the borrower, usually straight from the company’s bank account, or from a fixed percentage from each company sale after payment is made by the customer. The good news for borrowers is credit can be approved quickly, without the onerous and volume-heavy paperwork associated with traditional bank small business loans. The downside is that interest rates linked to such loans can be heavy, with many MCA rates over 20%.
5. Commercial Mortgage Loans
Secured loans, also known as collateral loans, are backed by a borrower’s asset. If you own something that can be used as collateral you can apply for a Secured loan. In spite of the fact that collateral loans could be the least convenient decision for any business owner to take but it is most creative way for to meet your urgent need of fund to meet your present and immediate cash needs.
Collateral has the tangible value that the lender can sell if you default on the loan repayment. With your business at stake, it is an added incentive for you to repay on time, which will ultimately boost your future business credit. Nevertheless, the lenders do not accept the full monetary value of your asset as security, they usually discount it. So you will need to deposit a collateral that is worth more than the business loan.
If you have any or more of the following assets you can certainly qualify for a collateral loan:
- House or home equity
- A car, vehicle, or even a boat
- Stocks or other investments
- Savings in banks including any form of saving certificate
- Future pay checks
The lower risk associated with a secured loan often results in a lower interest rate than an unsecured personal loan would carry. A lower interest rate offers big savings in the long-run. Not only with lower monthly payments, but also less total interest paid over the life of the loan.
Our Candid Suggestion is In Spite Of the Easy Availability of Secured Loan Think Twice about Using Collateral for a Secured Loan Because Some Kinds of Secured Loans Are Riskier than Others. Moreover, You Should Responsibly Repay Secured Loans To Avoid Losing Your Collateral Asset.
6. Small Business Credit Cards
A credit card is a fast and easy way to get capital to meet your urgent need of fund to meet your present and immediate cash requirements, and, most lenders have cards specifically geared fulfil this criteria. Unlike other forms of financing, credit cards usually come with a points or rewards system of some kind, and you may be able to leverage that to help your business even further. But it’s not all good when it comes to credit cards, there are dangers, too.
7. Peer To Peer Loan
Government backed loans and business loans from traditional banks are generally difficult to qualify for and have funding times of around 1 month. Sometimes small business need a loan with easier qualifications, a less time consuming application process, and quicker funding times. In those cases, new entrepreneurs may be better served by a short term business loan known as a peer to peer loan for small businesses.
Peer-to-peer lending is mostly an online activity. Borrowers come to the various peer-to-peer lending websites looking for loans – and better terms than what they can get through their local bank – while investors come looking to lend money at much higher rates of return than what they can get at a bank.
Following are the peer to peer lending plate forms whom you can approach to get funds for your emergency needs:
- Funding Circle (FC)
- Prosper Marketplace
- Social Finance Inc. (SoFi)
- Lending Club
- Funding Circle
Crowdfunding may be defined as, “the practice of funding a project or venture by raising many small amounts of money through internet from a group of people”
Crowdfunding has become a popular tool among women entrepreneurs to raise capital for their small businesses. It is known as donation-based crowdfunding
There are sites like Kickstarter and Indiegogo which make you familiar to let you solicit funds through online campaigns. Such donors are offered gifts instead of pay cheque. As such, Crowdfunding is good for the entrepreneur who has launched a new product and wants to test the market and confirm that they are valuable or worthwhile. It is known as rewards-based crowdfunding.