When you’re ready to grow your business idea, not having enough capital can be a major blocker. Many startups struggle to find the right kind of business loan that they qualify for. That’s because lenders prefer to see a track record of success to ensure they’ll get their money back — something you may be lacking as a newer business. However, getting funding for your startup isn’t impossible, and it begins with a little research. We’ll break down six simple steps to get your startup the funding it needs.
Most startups will have the best luck getting a startup business loan with online lenders that specialize in startup loans or have more relaxed eligibility requirements. Here’s a look at a few popular options for startups:
Your loan options aren’t limited to these loans. It’s best to hit a marketplace with your credentials and see what types of loans you qualify for and which ones fit your business needs best.
Calculate how much money you need to start or grow your new business by making a list of the expenses associated with your business. These might include rent, supplies, equipment, operational costs, marketing and more. Keep in mind longer-term expenses like hiring more employees or expanding your space.
Tally up these numbers and subtract any personal funding or money you’re getting from other sources. The number you come up with is the loan amount you’re after.
It’s smart to get an idea of your qualifications and how they align with the eligibility requirements of business loans on the market. This way, you’ll have an idea of what types of loans you may have the best shot at. Consider the following common variables that lenders weigh when determining whether you qualify for a loan and on what terms:
What you’ll need to apply for a business loan varies by lender. However, there are a few common documents that help lenders verify your identity and business before moving you on in the loan process. These include:
But, as a startup, you could increase your chances of securing a loan by also offering a detailed business plan that shows how you’ll generate income and pay back the loan.
Shopping around can really make or break you as a new business seeking the best deal on funding. You’ll have the highest odds of approval with an online lender. But you’ll have the best shot at the lowest rates you qualify for with a business loan marketplace. This way, you’ll be shown a list of lenders willing to work with your qualifications. From there, compare not only interest rates but lender reputation and other fees like prepayment penalties, late fees and origination costs.
Once you’ve narrowed your list of lending options to one, you’re ready to complete and submit your application. The application and underwriting process varies with each lender — most online lenders make it a quick process, some providing approval or denial decisions within minutes. From there, you can be funded anywhere from same-day to a few business days or more, depending on the loan type and lender you’re working with.
If the only thing holding you back from starting or growing your business is funding, but you’re worried about whether you’ll be approved, the best thing to do is just start the process. These six steps offer a simple roadmap to financing your business. By identifying your needs, you’ll have the information you need to search for and compare lenders willing to work with you.
Megan B. Shepherd is a personal finance editor at Finder committed to helping Americans navigate the financial world of loans and insurance. Megan’s expertise has graced the pages of Forbes, Fox, Time, Reviews.com, and carinsurance.com, adding invaluable information related to loans and insurance. Megan’s adept knowledge of financial topics has also led to contributions to reputable publications like Nasdaq and MediaFeed, where she intricately dissects and explains personal loans, financial strategies and smart borrowing tactics.
This article originally appeared on Finder.com and was syndicated by MediaFeed.org.
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