Infographic: What Is a Startup Loan?

When starting up your company, funding is the sunshine that germinates the seeds of your business ideas. Funding is the morning coffee that energizes your business through its early days. Any way you look at it, some cash is necessary if you want your business to expand and flourish beyond its infancy stage.

A cash reserve is critical, and, in most cases, indispensable, for your small business to move from nonexistent to profitable. You won’t usually earn more revenue than you spend at the very beginning, which is why you should locate sources of funding before opening your doors.

For many small businesses, a startup loan can be this engine to power your business as it gets going. Some small business owners opt to use money from their personal savings, but this can make you and your future earnings liable if something catastrophic happens to your company. Another option can be angel investors or venture capital, but these sources are often extremely choosy, and the competition is fierce.

In broad strokes, startup loans often function like small business term loans from traditional lending sources like banks. The terms are long—up to 25 years in some cases. Look for terms that are long enough that the repayment amounts won’t be an immense burden on your young business.

The range of these loan amounts is huge, from $500 to $750,000 depending on your business needs. Interest rates can range from 0% to 17%, so be sure to check the specific terms of your loan.