Applying for a loan as a startup business can be a stressful task. As an entrepreneur, you have other factors on your mind like finding the right co-working space. Startup business owners have a lot to worry about in the beginning, and loans can be extremely helpful in taking off this additional stress. Certain loans for businesses also can benefit the financing of the new company. Below, you will find the best corporate loan types for startup businesses.
Startup Business Loan
Startup business loans are the perfect way to get your company started. As the name states, this is for a new business. Therefore, it is a great option for a business that has limited financial history. This kind of loan acts like a credit card for your business. You can potentially use it toward the cost of renters insurance for your startup. To qualify, you need to have high personal credit. If you are able to handle your own credit well, it shows that you can do the same for your business. Another benefit to this option is that there is no prepayment required. Additionally, there is no interest rate in the first 9-15 months of the loan. However, the application process is fairly lengthy compared to other loans, ranging from 30-45 days. Startup business loans are a great corporate loan option for a new company.
Business Credit Card
Business credit cards are one of the best startup business loans to choose from. Again, to qualify you will need high personal credit. If you prove that you will not exceed your personal credit limit, the loaner will know that you can be trusted. As long as you keep up with your minimum monthly payments on time, this will be a perfect option for your startup business. Additionally, with a business credit card, you will earn rewards on certain purchases. This is the best option for a business that has ongoing business expenses. Although it has a slightly higher cost than other loans, it is a dependable option for your business, as long as you are responsible with it.
Personal loans are a cheaper option for a startup business. With no business history, it may be frustrating to get a business loan. By applying for a personal loan for your business, you are ensuring that you will keep the same financial responsibility with your business as you do with your personal finances. This is a great option because it is easy to qualify. As long as you have a strong personal credit, you will get fast funding for your business. However, there is a limit on how much you can borrow due to the fact that it is a personal loan, not a business loan. But the maximum loan amount should still be enough for what you need to cover for your startup business. Another thing to consider is how to get the loan. If you go through a bank, the process typically takes longer. You may also want to consider using an online personal loaner. This way, the process is quicker and you will receive a corporate loan fast.
Equipment loans are a great option for a business that requires a large piece of equipment. This could be anything, from a construction vehicle to computer servers. Many construction companies need equipment leasing services to get started, which can yield high bills. This loan is the best option for a business that needs to own the equipment for long-term use. Additionally, the repayment term is based on the expected lifespan of the equipment. This way, you will know about how long you have to pay back the loan. If you can’t pay back the loan, the equipment is used as collateral. This is a great option because of the low-risk. There is also less documentation to get approved for this loan. This option also uses personal credit for approval. The better the credit, the lower the down payment, and the lower the interest rate.
Line Of Credit
Another type of business loan for a startup business is a line of credit. This kind of loan gives the business a maximum amount to borrow a year, and the business can borrow the money at any given time. This is good for a business that may have a different profit margin per month. While this loan can’t be used for equipment or real estate, it is beneficial when used for inventory or operating costs. With this loan, you decide on a upper limit that will be available in your business checking account. This benefits the business, because the interest rate of this loan is only based on the advanced amount given by the loaner. As long as this corporate loan is paid back monthly in a timely manner, this will be the perfect option for a startup business.
There are many kinds of corporate loans for businesses. For startup businesses, there are a few specific loans to consider applying for. Startup business loans, such as a business credit card, can give the business benefits such as rewards per purchases. For specific financial purposes, equipment loans and line of credit can be helpful to any business owner. For a cheaper option, personal loans would be the better option for a startup business. Keep all of this in mind when looking for a corporate loan for your startup business.