Running a start-up business is tough. Not only are you launching a brand new business, but obtaining funding for a start.up is incredibly difficult. Thankfully, if your start up needs a loan, then you do have a variety of options available to you.
Why Do Start-Ups Have Trouble Borrowing?
Lenders need to know that they are going to get their money back. The problem for a start-up is that a brand new business is inherently risky. Most start-ups are never going to more than a few years. Most won’t even make money. If a company is not making money, then a lender will figure they aren’t getting their money back.
Start-ups tend to need a rather substantial amount of cash to get up and running too. Lenders really do not want to loan out this amount of cash.
Finally, when people are running a start-up business, they tend to have a lower source of income than normal. This is because they may be focusing on their start-up full-time and, therefore, cannot work a normal job. If somebody doesn’t have a source of income, then lenders really won’t want to lend to them. It is too risky.
How Do You Find a Lender for a Start-Up?
Thankfully, there are start-up lenders out there that are willing to lend cash to brand-new businesses. Although, borrowers will have to do their due diligence to ensure that they find the right lender for them.
The best lenders will be those that offer flexible repayment terms. This is because running a start-up business is inherently unpredictable. Budding entrepreneurs need terms that suit their way of doing business. This will give them a much greater chance of being able to pay the loan off.
The repayments should be fairly decent too. Start-ups do not want wildly high repayment terms on their loans because this can make it tremendously difficult for thier business to grow.
Start-up lenders will never require financials or tax return information either. This is because these lenders know that start-up businesses likely haven’t been running for long enough to actually have this data to hand. Even if the companies did have this data hand, it likely isn’t going to give the lender that much information about whether the borrower has the ability to repay the loan.
These loans should also give the start-up the money that they need to get their business off the ground. Obviously, there will be limitations in place because start-ups are still an inherently risky business, but most lenders should be able to offer a reasonable amount of cash.
If you are a start-up company, you do have a wealth of options available to you when it comes to sourcing a loan. You will have to go to special start-up lenders. Most traditional banks will not lend to you. However, if you do your due diligence and take the time to choose the right company, we are positive that you can get the funding that you need to launch your business.