Startup Loans with No Credit

Jan 7, 2020

Startup Loans with No Credit

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Every great business needs to start somewhere. Apple and Amazon were launched in garages. Samsung began as a grocery store. And Coca-Cola was originally made in jugs and then sold for a nickel a glass in a local pharmacy.

The point is, nearly all businesses come from nothing before becoming something. There are multiple options for funding your startup, as most businesses need financing to get off the ground.

“Money indeed makes the world go ’round, and even the leanest startups can’t get very far without capital,” says entrepreneurial expert Jack Tai. “When starting a business, the different avenues of funding available to you are not all created equal. The type of funding you choose can ultimately determine the rate at which your business can grow, your financial obligations, and how much ownership you retain.”

Debt financing is a preferred method because it lowers your tax liability, gives you full ownership of the business, and provides a structured plan moving forward. Many entrepreneurs seek loans from the Small Business Administration (SBA). With interest rates and repayment terms comparable to the best bank loans, these loans are partially guaranteed by the agency, which lowers the lender’s risk and makes them more willing to work with you. For this reason, SBA loans are excellent for those who have faced rejection in the past.

The SBA’s 7(a) program is the most ideal for business startups, as these loan products have excellent interest rates and can be used for nearly any purpose related to getting your business up and running.

Another solid route is a business credit card. They’re simple to use and can help you earn rewards such as travel miles, cash, or gift cards for your day-to-day business purchases. Business credit cards put cash at your fingertips, and you only pay for the money you use. It’s an easy way to access a revolving form of financing and build your credit score in the process.

Other popular members of the startup loan family include short term loans and equipment financing. These loans can fund quickly and provide cash for a wide range of business expenses.

One thing these options share in common is that the lenders will scrutinize your financial history during the application process. They’ll focus on factors like business debt coverage, business debt usage, and business revenue trends. Other relevant data comes from how you’ve run your company, including your payment history, number of trade experiences, and outstanding balances. If you have a solid report, you’ll be considered a prime candidate.

This financial analysis should hardly come as a surprise. Just as you are probably cautious when it comes to lending money to family and friends, lenders must safeguard their funds. If they were to freely share with every borrower who contacted them, they’d go broke within a matter of months. Their due diligence is essential to their survival.

About the Author

Grant Olsen

Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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