How to Get a Business Loan for Your Startup

Hi everyone! If you’re watching this video, I assume you’reabout to start a business or recently started a business, so congratulations! You’re about to go on a really awesome adventure,and we’re excited that we get to be a part of it here at Fundera.

My name is Meredith Wood, I’m the editor-in-chiefof Fundera, and we love talking to new business owners about the things they can do to gettheir business off the ground as successfully as possible.

So, let’s dive right into today’s topic whichis how to get a loan for your startup.

You just started a business and you want toconsider getting business financing now or in the future.

Take some time to really take care of yourpersonal credit because the stronger this is, the better your options will be in thefuture.

If you don’t have revenue, if you don’t havea time in business, these are the things that I want you to consider.

The first is a much softer option and is somethinga lot of people consider, this is your family or friends.

These are people who you can go to, explainyour business, what you’re doing.

It can be an option for gathering a smallsum people from your, sort of, trusted circle.

The reason I want to start with this is thatthere is not a magic formula here to getting money from your family or friends but thereare things you can absolutely do wrong.

If you’re going to consider this route,you want to make the arrangement as professional as possible and have a real contract signedwith them.

So it’s very clear what the terms are of themoney that they’re lending to you.

And this is because those relationships areimportant, if these people are taking this chance on you, chances are you’re very closewith them.

And that’s something that you absolutely don’twant to risk.

So the more formal that you can have the arrangementbe, the better for both yourself and your relationship, long term So another thing I want you to consider thata lot of people have questions on and is very popular right now is crowdfunding.

Crowdfunding is something where people haveput their products up on Kickstarter or similar platforms.

Crowdfunding can be very hard and it’s notoften the best solution for let’s say our restaurants and our dry cleaners or our contractorswhen they’re looking for money for their business.

The process can take a ton of time, and aton of really sort of sweat equity on your end to get this going.

So crowdfunding is something you should considerbut you should know that it can often be more work than what you’ll see in return and it’snot something you want to put all your eggs into that singular basket.

Another thing to consider are business grants.

Business grants are things you can apply throughthe government or private institutions or nonprofits to help you get some money to getyour business off the ground.

There, of course, is going to be a whole processin terms of application, you want apply for grants that are relevant to your businessand what you’re trying to do.

And a lot of times grants can be small dollaramounts so again this is not going to be something that gives you every single dollar you needto get your business off the ground, but it can be a nice sum of money that can go reallyfar for your business as you’re getting started.

There are a ton of grants out there, it canbe really hard to sift through all these things but we’ve compiled a list of 105 differentoptions for your business.

So if this is something you’re interested,you can click the link below to learn more about those grants available to small businesses.

So the next option I want to talk about arebusiness credit cards.

This is something that we believe every newbusiness should have if they’re able to qualify for.

The great thing about a business credit cardis the only thing you need to have is a strong personal credit score.

You can start seeing some options at 580+,at 620+ you’ll have even better options, and at 700+ you’ll have a lot of options.

There’s no minimum revenue requirement, andthere’s no time in business requirement.

So when you’re just starting out, it’s agreat way to finance your business, especially when you consider zero percent intro APR cards.

With these types of credit cards, there isan intro period when you open the account that has no interest for a set period of time,so this means you can put transactions on this card and you don’t pay back interestuntil that intro period is up.

The intro periods are usually about 12 to15 months.

The thing is, you need to be prepared thatwhen that intro period is up, you can pay back that debt because otherwise the APR isgoing to be quite high, and this debt can turn very expensive for your business.

So the last product I want to highlight todayis the most traditional loan option here in our lineup today and that’s an SBA microloan.

An SBA microloan is a loan where the SBA isgiving money to intermediary lenders to lend to startups and small businesses, when they’rejust starting out and get them off the ground.

So, what do you need to qualify for an SBAmicroloan? You need to have a minimum credit score of575 and a time in business of as little as six months.

So again, this comes with a time in businessrequirement but it doesn’t come with a revenue requirement, which is good news because withmore traditional funding options, there’s also usually that revenue requirement component.

So, what is an SBA microloan? It’s a term loan where you pay back monthlyfor a certain period of time, and it has a maximum loan amount of up to $50,000, so againit’s not a large loan but it’s definitely larger than a lot of the other options thatare out there on the market.

The term has a max limit of up to six years.

And you can actually get these loans in asfast as two to three weeks, so a great option if you do need money quickly.

You do have a lot of options as a startupbut I know it can feel intimidating out of the gate and like you don’t, but be patientand really invest in building up your personal credit score, really invest in getting sometime in business and start generating some initial revenue, because when you do thosethings you will unlock traditional financing options.

Here at Fundera it’s our job to help businessowners answer whatever tough questions they have around their finances and financial solutions,so if you have any questions we can answer for you do visit Fundera.

Com or leave somequestions or comments below, we’re happy to get to them.

Best of luck getting your business off theground and we hope this was helpful, and we hope we can be helpful in the future.

Let us know what other types of content you’dlike to see.

We’ll be right here making more videos.

Source: Youtube