The most essential requisite for starting a new business is finance. Because banks and other conventional lending sources are apprehensive about giving loans to start up businesses, it is an important task for these business owners to arrange for appropriate financing sources. Since there is a huge difference between small business start up loans and loans for established businesses, it is extremely important to find a suitable lending source according to the requirements of the business. Start up loans are more dependent on loans for all of their financial needs than established businesses, and needs to be financed for almost everything required to set up the business. So before you start a new business, it is overly important to make a detailed research of the market to find the most appropriate lending source and loan deals for your business.
Let us discuss some of the important features of small business start up loans:
- These loans are mostly provided by the Small Business Administration (SBA), which is a United States government agency providing financial support to small businesses and aiming at building up the strength of the country’s economy by supporting the establishment of small businesses. SBA does not provide these loans directly to borrowers, but through private-sector lenders that are guaranteed by the SBA.
- Since start up business owners do not have enough capital, these loans are mostly obtained at lower interest rates.
- SBA acts as your guarantor, and helps you in acquiring business start up loans in case you do not possess properties for mortgage purposes.
- Small business start up loans can be obtained very fast. You get them as soon as you apply for them. This is extremely helpful for new business owners who are mostly dependent on loans for all their business requirements.
- These loans can be secured even by individuals having poor credit histories, including arrears, bankruptcy, late or missed payments, insolvency, IVA etc. Small business loans provide an opportunity to the borrowers to improve their credit history.
- These loans can also be used for refinancing an already existing business.
- Business start up loans can be available in any amount, ranging from a few thousand to more than $100,000. It is advisable for borrowers to make a meticulous research on the market and a detailed comparison between the terms and conditions offered by various lenders to find the most suitable one for your business.
These loans are available for anyone having plans to start a new business.
Starting a business involves various details. Here are some of the important purposes a business start up loan can be used:
- Purchasing the office space.
- Purchasing essential machineries, furniture and other office equipment.
- Purchasing necessary electronic equipment like a computer, fax machine, printer etc.
- Hiring staff and paying for their salaries.
If you are new in the world of business, it is always advisable to consult an experienced and knowledgeable counselor to discuss your best options for a business start up loan, and the various ways of finding the right lender for you. It is also important to make perfect and flawless business plans before you decide to apply for loans.