New business loans are critical to get your business up and running. Acquiring new business loans can be a frustrating experience as many lenders are hesitant to work with new businesses. They are worried because you do not have any business credit built up and this is a red flag to them. They instead need to rely on your personal credit rating to figure out how you will manage the finances of the new business and decide if you are capable and able to run the business and receive the loan.
Unfortunately starting your own business and finding new business loans is not going to be easy. There is a huge percentage against you since over half of all new businesses fail within the first 24 months of operation. How can the lender be sure that you are the right type of business and leader that has what it takes to stay in business for the long haul? Here are some of the new business loans that are available to you and what you can do to qualify for them.
SBA Loans
Perhaps one of the most well-known new business loans are the SBA loans. In order to qualify for an SBA loan, you need to have proof that you have applied for other loans in the past and you have been rejected. Then the SBA will take a look at your application and your business plan to determine if you are eligible to receive new business loans that they have to offer. New business loans are great as they allow you to purchase all of the equipment, machinery, and other things that you need to get your business up and running. It's a wise idea to check your personal credit rating before you apply for new business loans as this will allow you to see where you stand. The SBA will not even consider you for a loan if your credit is below 680 so make sure you check it before you apply.
Unsecured Loans
New business loans are also called secured or unsecured loans. When you need money for your business, are you planning to use your home to secure the loan? While this will increase the amount of financing you can get and the interest rate, are you willing to put your home on the line for your business? Secured loans are great but they are risky. Unsecured loans on the other hand don't ask for much, just your credit history and a signature that you will pay back the money you borrow. The amount of money you borrow is limited as these new business loans are considered a short-term solution for your business needs.
Investors
Your greatest chance to get a lower interest rate and high amounts of money are with investors. If you have heard of angel investors or you know any venture capitalists, you are in luck. These individuals will be able to provide you with the new business loans you need that traditional lenders will not consider you for. Venture capitalists give away over $25 million per year to small businesses. You just need to find the right investor and make sure you have a savvy business plan that will convince them to invest in your business.
Bad Credit Loans
New business loans are also available for individuals that have bad credit. Knowing that you have bad credit, don't waste your time with traditional lenders as they will not give you the time of day. Your best option is to work with the bad credit lenders that can offer you the financing you need to start your small business. Be prepared for high interest rates and you may need to front collateral for the loan as well.
Corporate Credit Concepts specializes in new business loans. For more information about new business loans and how it might benefit your business, please CLICK HERE for a free phone consultation.