One of the most difficult obstacles to overcome when looking for financing is convincing business loan lenders that your new business venture will be a success and that you’ll be able to pay back the startup business loans you are applying for. Two of the most sought after attributes of a creditworthy business venture are longevity and available collateral, both of which will most likely be scarce if you are just starting out. Despite that, there are places you can go to and institutions you can turn to for assistance.
Hearing the phrases “government agency” and “available assistance” together in the same sentence is a foreign concept to most business owners. Government agencies are known in the business world for taxes and regulations that are prohibitive to success, not helpful. The SBA is not one of those agencies. When you are new you can turn to them for help with loans that they guarantee up to 50% on back to the banks. They also offer entrepreneur loans and veterans’ preferences.
Another option when you first start out is to apply for a business credit card. If you have a good personal credit history you can use that and put a credit card in the business name under your tax ID number to build a credit rating. If you do this you’ll want to use the card as sparingly as possible and pay off the balance every month if you can to avoid interest charges. Business credit cards, no matter how they are presented to you, are nothing more than high-interest startup business loans.
Banks and credit unions will give loans to new businesses but you’ll most likely have to come up with collateral. Be very careful when you make arrangements like this. Take your first offer and bring it to another bank to see if they can offer something better. You can even go online and visit websites where banks will compete for the right to loan you money. Read all terms and conditions very carefully when you choose to do business with anyone. Remember, those sub-prime adjustable mortgages looked great until they reset and interest rates went through the roof. Don’t let that happen to your business. Shop carefully and you can find the startup business loans that fits your needs.