Initial Lending Group (ILG) knows how important capital is to any business. That is why we make it easy to obtain business loans to help your company grow. Capital is important for several reasons but none more than: “It takes money to make money”. This is especially true when it comes to small businesses. Whether you are looking for business loans or business lines of credit, look no further, here at ILG we are the experts on getting your business the funding that it needs. Approvals usually take 48 business hours and funds can be transferred the day after.
Small business startup financing options are small business loans that are targeted toward startups without much business history to speak of. There are a variety of ways that you can gain funding as a small business, and securing adequate funding is the only way to ensure the long-term success of your entrepreneurial enterprise. The qualification process varies between different types of small business loans, and certain loans are easier to qualify for than others. In general, you’ll receive these types of loans from accredited financial institutions, but there are also plenty of other ways that you can get funding as a small business owner.
While a small business loan can be defined as any way that a small business owner gets money to help with their venture that they will eventually pay back, there are a few different types of loans that are most commonly used by small business owners. Some examples of these different types of loans include the following.
While you may also want to generate other sources of borrowed income, small businesses that are just starting out should definitely open business credit cards within their first six months of operation. Business credit cards are different from traditional startup loans in a number of ways, but they provide funding to small business owners in the same way that any other type of funding does. These credit cards provide you with access to a set line of credit that resets every month, and as long as you pay off your balance promptly, you won’t accumulate any interest. While other types of small business loans may be more useful to your business if you don’t expect yourself to be able to pay back the money that you’ve borrowed immediately, business credit cards provide you with temporary flexibility right when you need it most. In some cases, it’s possible to get business credit cards that have zero interest, which means that you can accumulate more debt on these cards without having to worry about paying it back quickly. Applying for business credit cards is fast and easy, and you generally don’t have to provide any collateral to acquire these lines of credit.
Crowdfunding is a startup funding method that has gained more popularity in the last decade. This type of funding allows you to generate money that helps your business get off the ground, and unlike other funding sources, revenue from crowdfunding sites like Kickstarter or IndieGoGo comes directly from people who want to give your business what it needs to thrive. The donations received from crowdfunding initiatives are generally small on the individual level, but once they are combined, these small donations can contribute significant amounts toward taking care of your startup costs. Unlike other funding methods like debt financing or equity, you don’t have to parcel off shares of your company to take advantage of the benefits of crowdfunding. In most cases, you can receive funds through crowdfunding without having to give up anything in return; usually all that’s required by people who contribute to your crowdfunding campaign is a small gift or an acknowledgement. The success of your crowdfunding initiative depends on the creativity and attractiveness of your idea, so instead of parceling out parts of your company, you attract people to your crowdfunding campaign based on the innovative nature of your products or the excitement factor of your services.
The SBA microloan program is controlled by the Small Business Administration, which is a government body that helps American small businesses succeed. These loans are called “microloans” because they are generally smaller than traditional business loans. The SBA hands out loans on an as-needed basis, and the loans can be as small as $500 or as large as $50,000. According to the SBA, the average loan size is about $13,000, which can be the perfect size for a startup that is just beginning their process of articulating their ideas into the marketplace. However, the $50,000 maximum size of the loans in this program may make them insufficient on their own for businesses with significant needs, so larger businesses may want to find alternative revenue streams above and beyond the SBA microloan program. While the SBA administrates the microloan program, the loans offered in this program don’t actually come directly from the government. Instead, the SBA gives funds to reputable financial institutions that then have the final say in terms of how to apply these government funds. Most of the intermediary financial institutions that the SBA works with are local, which means that they have an investment in their communities. As such, they’re well equipped to help you accomplish your business goals within the context of your local community.
Like crowdfunding, small business grants offer the promise of free money with nothing to give back. Ideally, you would be able to fund your entire operation on the back of small business grants, but you definitely shouldn’t hedge on this possibility. Small business grants are often quite hard to secure, and they’re often reserved for certain types of institutions that are operated by disadvantaged social groups. Some of these grants are doled out by the government, but others are offered by non-profit institutions. You’ll need to apply for each grant that you want to receive separately, which means that this funding method can consume a lot of time without any guarantee that your requests will be granted. However, it’s still definitely worth giving this type of funding a shot since it presents no risk. One of the biggest issues facing small businesses after they’ve been in operation for about a year is paying back their debt, and always remember that your ability to pay back what you owe is dependent on how much your company succeeds. There are a variety of lists available on the internet that can show you where to find small business grants and help you understand whether you’re eligible for these risk-free small business funding methods.
Never underestimate the power of community when it comes to funding for your small business. As you search for the best ways to take care of the financial needs of your fledgling business, you should remember that many of your friends might be interested in taking out a stake in your success. Even casual acquaintances from high school or college who share your entrepreneurial mindset may want to invest in the success of your business. While some of your friends might be generous enough to give you some money without any strings attached, most people will want their money back eventually with interest. However, the interest rates charged by your friends will usually be lower than those you’ll have to face at a major bank. Alternatively, your friends may opt to take a percentage of your company in exchange for some upfront cash. If you expect your business to succeed in the future, you should be very wary of selling off large chunks of your company before it even gets up onto its feet. Family members are often more willing than friends to give out money for free, but they also might want to have a stake in your company if they want you to succeed in the long run. Before you ask a friend or family member for a loan, ask yourself if you can trust that person. Also, while you may be extremely comfortable with that person in the personal sphere, loans for businesses should always be treated professionally no matter who the lending party is. Keep in mind that if things go south with your lending agreement, harm could be done to your personal relationship as well.How do you qualify for these loans?
When it comes to qualification, each type of loan is different. If you get a loan from a major financial institution, it’s likely that your loan officer will want to take a close look at your personal financial history and your plans for your business before they offer you a loan. Even after this background check is complete, a financial institution may reject your loan request, which means that you’ll need to spruce up your portfolio and get back in the game with a fresh mindset. The same goes for business credit cards, but credit card companies are usually less stringent in their qualification procedures. No matter what, having a good credit score is important if you want to get a traditional loan, so make sure that you’ve taken care of any personal debt before you try to start a business lending history.
The age of your business also plays a crucial role in applying for startup loans. If your business has been in existence for six months or less, lending institutions will view your business as a startup, which will make it easier to qualify for loans that have lower interest rates. If your business is closer to a year old, you might want to apply for traditional loans instead.
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