You’re tired of your job. You’ve got a great idea for a business that your area needs, but how do you find financing? There are many avenues you can go through to get start-up business loans. The problem with start-ups is there is a lot of risk involved. Many start-ups go out of business within the first year, and many loan providers don’t see a return on their investment. If you’re willing to put in the effort to make your business a reality, then there are many avenues to find a small business start-up loan.
Small Business Administration
Perhaps one of the best resources for a new business is the Small Business Administration (SBA). It has a variety of loan programs available to help with starting and maintaining your business. Many of their loans can be granted by banking institutions.
- Microloans – designed to provide short-term financing for purchasing a wide variety of items
- General (7a) business loans
- CDC/504 loans – real estate investment and equipment loans
Banks and Other Lenders
If you are looking for something a little more traditional, then you can try getting a standard term loan from a bank or other lender. These loans can be for as much as needed, but you will need to qualify. A bank will require documentation and a business plan. These loans are often not backed by an organization such as the SBA, and therefore, the bank is taking all the risk. Some key items of term loans include:
- Collateral to back the loan
- A possible balloon payment which requires a single, large payment at the end of the term
- Fluctuating interest rates for variable interest loans
For people with little up-front collateral, the initial phase of borrowing could come from family and friends. This should be avoided if possible as it can lead to soured friendships or strained relations. Some start-up business owners choose to use credit cards for immediate start-up costs, and others borrow against their homes. For the most part, these should only be done as a last ditch, desperate measure.
Make your dream a reality today. Call us at (713) 893-5759 or fill out our online form to start the funding process.