How To Get a Start-Up Business Loan

You have a great business idea and a few pieces in-place to run a successful operation. What you might not have is cash flow. Continue reading this article on how to get a start-up business loan, so you can get your business off the ground and running.

How To Get Funding For Start-Up

Getting funding for start-up doesn’t have many requirements for new businesses. Because the start-up cannot prove revenue earning and has no capital or credit history, requirements are lenient. The business idea and your personal credit score determine the likelihood of receiving a loan.

Looking for easy approval for start-up business loans? Lenders are cautious about how their capital is used. You will need a detailed plan for your business idea. Presenting how you plan to generate cash flow, projecting how long it will take to earn revenue, and estimating how fast you can pay loans back has to be discussed with lenders.

Preparing required documentation is an essential step in securing funding. Every business operates under a legal name. For sole proprietorships and partnerships, the legal name is the business owner(s). For a limited liability company (LLC) or corporation, its legal name is officially documented and agreed upon founding.

If you plan to conduct business under another name, you must register the legal title with your state and acquire a DBA (Doing Business As). Once an alternative name is approved, the business must publish the name in a legal, recognized publication. The following states require DBAs:

  • California
  • Florida
  • Georgia
  • Illinois
  • Minnesota
  • Nebraska
  • Pennsylvania

Types of Loans

There are many loans available to small businesses. Above all, you need to be sure covering a loan through its extended time is a realistic option. Understanding collateral requirements, penalties for missed payments, interest rates, and the application process length are significant factors to understand before applying. Let’s check out a few types of small business loans:

SBA 7(A) Loan

The most common way to get a start-up business loan is from the Small Business Association (SBA). Their 7(a) loan, typically used for real estate, is an excellent option for building working capital in the short- and long-term. 7(a) loans have limited fees and defined interest rates, making them popular among applicants.

A competitive approval process indicates that potential business owners should showcase a strong personal credit score with additional funding vendors. An SBA loan can be approved for up to $5 million in funding for a five to 10-year period.

504 Loan

504 loans are narrowly defined, financing fixed assets that promote business growth. Usually approved for construction companies, a long-term fixed rate structure for 504 loans is an appeal; however, they can’t be used toward working capital. 504 loans can be approved for up to $5 million in funding for a 10 to 20-year period.

Pilot Loan Program

If your business has operated for a few years and is financially struggling, limited-time pilot loan programs are an option. The Community Advantage Loan Program awards businesses in underserved markets funding up to $350,000.

Any business can receive loans in working capital for up to 10 years and through real estate for 25 years. Due to the mission of the Community Advantage Loan Program, cash flow and revenues are not weighted heavily in a company’s shot at eligibility.

Microloan

Microloans are versatile short-term options for building capital. Distributed through the SBA via third-party lenders, loan lengths will typically vary. Microloans can be used toward any business expense except existing debts and real estate, worth up to $50,000.

Still considering the best options to get for your start-up business loan?

Check out a quality business finance company like Qualifi and their offers below.

Get a Business Line of Credit

How To Get a Loan With an LLC

Limited liability companies (LLCs) differ from other businesses as they operate as separate legal entities, owning their assets, liabilities, and bank accounts. Like other businesses, they still need to borrow money. LLCs provide benefits to small business owners:

  • Reduce personal liability through LLC, provides a personal guarantee to the lender
  • LLCs have their own credit score history in addition to personal history
  • LLCs show serious business aspirations, making connections to grow their brand
  • LLCs have tax benefits with the IRS

What You Need

Before applying for a loan with an LLC, you need to form an organization legally. Reach out to your secretary of state and get separate bank accounts to create a business legally.

Once you begin the application process with a vendor, you will need to prepare financial documents. Providing debt repayment plans, account statements, tax returns, cash flow statements, projections, and balance sheets are necessary to get a loan with an LLC.

Next, your LLC needs to provide official business documentation, including licenses, operating permits, business credit scores, personal credit scores, and business history.

Finally, an LLC has to prepare collateral and personal guarantee to get a start-up business loan. Collateral states that vendors can seize specific assets if you fail to make repayment on debts, while guarantees make you personally responsible if the LLC can’t repay loans.

The Best Loan Options For You

QualiFi has the experience to work in any industry. We have funded restaurants, construction, retail, trucking, healthcare, manufacturing, and more. Check out the business term loans at QualiFi:

  • Available Credit: $10,000 to $20 million
  • Time To Fund: 1 day to 4 weeks
  • Term Length: 6 months to 30 months
  • Interest Rates: 5.49% and up

Get a Start-Up Business Loan With QualiFi Today

At QualiFi, we know what it’s like to be a new business in this economy. Contact our professionals today to lay the foundation of your organization by getting a start-up business loan.

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