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Options available for small business start up loans
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Micro loans - You are aware of the saying, it takes money to make money. This program doesn't require one to have a very good credit and hardly any collateral would do. This finances purchasing, furniture, fixtures, small equipments inventory etc. It also serves your working capital need. If your need is a small amount to get your business started, then this the loan you are looking for. Range: $100 to $ 35,000.
Basic 7(a) Loan Guaranty - This is by far the most flexible primary loan program a start up (as well as existing) can look for. SBA guarantees up to 90 % of the loan amount through lending (banks and non banks) institutions. The amount being higher, you can use this for major purchases. 7(a) loans are available on a guaranty basis only.
You can use the proceeds to purchase an existing business
Purchase land or building or equipments and machineries.
Short/long term working capital
Many lending institutions and banks accept your equity in your home as security for a start business loan. However most of this type of loans falls under SBA loan programs.
LowDoc loan with its simple documentation and long term (up to 25 years for up to $150,000). If you are stuck with cash inflow fluctuations, the CapLine loan helps you tide over. Term of may be small (5 years) for a loan of up to $2,000,000.00, it really saves small businesses from cost over runs.
A bank or any financier will be impressed if you have staked your own money in your business. So how much do you need to invest so that you qualify for an SBA loan? As a rule of the thumb, you need to have invested anywhere from one-fifth to one-third of the total project cost. So much so the loan requirement will have gone down.
Certain private lenders offer business start up loans not exactly in lines with the SBA loans program for start up businesses. Nevertheless, their documentation requirement is simple as compared to SBA sponsored programs. In cases such as small loans they provide you loans starting from $1000 only. All that you need to do is just prove you have at least $1000 regular monthly earnings and a now permanent address.
Rather than the loan programs it is your innovativeness that opens loan avenues for small businesses. For example, you can raise some equity by partnering with some one whose credit is fine/above average so that more loans can be raised on the strength of
your new partner. Ultimately it is not just enough to improve your personal credit history, for small business to survive and grow, develop its credit in order to qualify for more loans.
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