Funding is one of the most important steps to make sure that your business dreams become a reality but there are many options to consider depending now on what your needs are. These loans can help you with a wide variety of useful operations such as acquiring inventory, taking care of accounts payable, making sure that you have emergency cash on hand for unexpected expenses, and for you to hire the right team for your various projects.
Some of the loans that budding new startups usually go for are SBA loans, 401k rollover loans, angel investors and venture capital firms, and lines of credit and credit cards. Let’s go into these in more detail for you to reference if you need a loan for your startup.
SBA Startup Loans
The reason why most startups get rejected for loans is that they have a very limited credit history and they cannot really provide documents of years’ worth of profitability yet. Banks and other lenders will think that this is too risky because most startups do fail and they may not ever recoup the money that they provided.
An SBA loan is a good way for startups to navigate through this because SBA loans are guaranteed by the United States government. Because these loans are guaranteed, lenders will not feel as worried about the potential risks and will be more eager to provide you with a loan.
Get Loans From Your Family Members
If you do not want to enable yourself in the legal problems of getting a loan from a lender, your family members can be a great resource for you to request these loans informally.
The main advantage of getting a loan from your family members is that you do not have to worry about them not understanding your plight. They are very well aware of what type of person you are and whether they can trust you to pay back the money or not.
Your family members are also not likely to pressure you if ever you fail to pay these loans on time.
Angel Investors
Even though angel investors are not really known for giving out loans, they are more known for taking some of your equity in exchange for funding, you can definitely negotiate with them to structure your funding as a loan instead. Remember that they don’t really care about how they make their returns on investment, they just want to be sure that they can turn a profit with their money, whichever way that happens.
Prepare your pitch deck and clearly explain why getting a loan from them is the best idea. Remember, you are talking to someone who is an absolute expert in the world of finance so make sure that your pitch is as thorough and professional as possible.
Try Getting Loans Online Through Social Media
This method is a little bit unorthodox, but it is definitely possible to get a loan through social media. There are various groups on Facebook that are dedicated to small startup investment and even a threat on Reddit that is directly related to small loans. This should be an option for you if all else fails because this option lacks the formality of getting a small business loan from an established company and these are not as easy to trust as getting a loan from your family members.
No matter what your situation is and what stage your business is in, there is always a way to get funding for your operations. Just keep in mind the main points we discussed and you should be able to find the perfect option for your business to finally get funded.
