When a business is brand new, a startup, money is the one thing the owner needs the most. Without adequate funds, it’s difficult to establish necessary inventory, and it’s almost impossible to expand into a good business location or travel for business purposes. Many people who start their business from scratch find this the one hurdle that they can’t seem to get over.
Other businesses seem to be able to get the money that they need, often in a line of credit from their area bank. But, why is it so hard for a new company to get the loan they need? The answer can be summed up in one word – risk. Traditional banks and similar financial institutions know, often from their own experience, that start up business loans are generally risky. This means they will say “no” more often than not.
There are exceptions, though they’re few and far between. You might be able to get a loan to begin your business, but the bank may ask for collateral (cash, real estate) equal to the amount of the loan. Most entrepreneurs don’t have anything close to that. You may be able to get some funding from a classic bank, but chances are the amount will be limited (probably much lower than you really need).
A new company usually has few assets, though the individual behind that business might be in a better position. Of course, this means you’ll need to put up personal assets as collateral or get someone with solid assets to cosign with you. Banks will also look closely at your ability to generate revenue in the business, even if you have assets to back the loan. A brand new company may not be able to show this revenue-generating ability for the obvious reason that it’s not in business yet.
Some financial institutions, especially traditional banks in your community and the immediate area, do not loan money to a startup. So, what is the founder of a new company to do? Find a good alternative. They are out there, especially online, and in most cases they focus on helping new businesses whose owners have been turned down by banks. They’ll even talk to you, seriously, if you have less-than-sparkling credit.
Knowing Is Half the Battle
When you visit the website of a well-known, reliable lender, you can usually get an answer immediately, or within a matter of minutes. This efficiency is extremely important, because you certainly don’t want to wait around for a “yes” or “no,” which you’ll do if you go to the local bank. You’ll have some indication of where your plans are headed and the specialists at the leading provider of business loans online will work with you every step of the way.
The process can be relatively quick and efficient. Just complete the basic pre-approval form online, provide a few necessary documents, and wait for your answer (or your money). You have several options, including fast business loans for smaller amounts, equity business loans, and unsecured loans that can give you access to the funds that you need to get started and succeed.