Starting a small business has always been expensive. Fast forward to our post-Covid world, trying to get a business everything it needs to hit the ground running can feel next to impossible. If you’re currently juggling doubts and questions, never fear!
Every small business owner faces startup expenses. These expenses will vary depending on your business type. Whether you need heavy machinery or a new laptop, coming up with the cash for equipment can be difficult. On top of that, you need to purchase inventory, pay contractors, cover rent and meet payroll.
To make matters more complicated, outside funding can be very difficult to access for new companies. Thankfully, there are many types of startup business loans today to choose from. These loan options make the process of securing funds for a startup more simple and straightforward.
What is a Startup Business Loan?
What’s the main difference between a business loan and a startup business loan? A startup business loan is a form of financing made available to brand new companies in any industry. The details surrounding them can be lengthy and involve some research and comparison.
For example, if you established your business today, you likely won’t qualify for a startup business loan. Startup lenders will want to see that you’ve been in business for at least 6 months to a year. No, you don’t have to show an incredibly full list of customers, but they will want that reassurance that you’ve existed for at least 6 months.
How Easy Is It to Secure a Startup Business Loan?
Ultimately, the difficulty of the application process will depend on your credit score. How low is your current credit score? If your score is between 700 and 800, you have a strong chance of being approved. However, if your score falls below 680, you’ll likely face more obstacles. This is where turning to alternative financing options can help.
If you still want to pursue a more traditional startup business loan, you can try offering collateral (e.g. real estate, equipment, vehicle, etc.) Choosing this route can increase your odds and possibly win the approval you need for startup funds. But if your credit score is really low, you will likely need to turn to options that do not require a loan application (personal savings, family investments, crowdfunding, etc.)
Why You Should Consider Alternative Lender
The biggest advantage of partnering with an alternative lender is speed and simplicity. Alternative online lenders are a great option when you have a limited financial history and need funds quickly for growth. The key is to make sure you do your research and work with a lender that specializes in providing services to your business type and industry.
First American Merchant understands the challenges startups face and offers to finance tailored to meet your unique needs. With just a few documents and a straightforward application process, you can have funds in your business’ bank account in as little as 24 hours. With FAM, you can enjoy solutions that allow your startup to chase opportunities and fuel growth.