Getting a start-up loan requires a lot of strategies because, at this point, your business doesn't yet have a business or commercial credit history. Before getting to your loan options, it is important to note that to qualify for any loan you will need a business plan that details what the business is about, who will be your clients, the physical place where your business will be and when it will be operating.
Another option is a business credit card, which is easy to get, and you don't need excellent credit to qualify. The downside is the high-interest rate and capital limit if you need to make a large purchase of property, equipment, or inventory.
The next option is a line of credit, a type of revolving credit that gives you access to capital whenever you want, and you only pay interest on the amount of money you withdraw. The line of credit can provide you with more capital than a credit card, and the interest is much lower; But of course, you need better personal credit to qualify.
Financing Of Machinery And Equipment
Another option is "equipment financing", which consists of using the equipment that you will acquire for your business as a guarantor of a loan.
In case you cannot meet the loan repayment, the funder can sell your equipment and get their money back.
Accounts Receivable Financing
Accounts receivable financing can also help you, but it comes at a great cost because more than a loan, it is a form of quick money. It is basically about selling your future income to the funder at a lower price for him.
Finally, there is a merchant cash advance, which is also a form of quick money. Payments are made through a percentage of the debit and credit card income your business receives. If your business does well, you pay more and get out of the loan faster, and if it does badly, you pay less.