If you have a fantastic idea for a business, you can make it a reality by applying for a startup business loan through Lendio. You will need money to get started since opening a business can require a massive capital influx: from raw materials or location rent to software or operational costs.
Some people find investors, but another way to get that cash is with a startup business loan. If you don’t want investors or can’t find any, then it’s time to learn more about startup loans for a small business and how to apply to one using Lendio‘s network of over 75 lenders nationwide.
What Are Startup Business Loans?
A startup business loan meets the needs of a person just starting out in business. The new company hasn’t established a credit rating yet, so these loans tend to rely on the new owner’s personal credit and score. Most startup business loans offer terms of several years and can be as long as 25 years, depending on the lender. These loans aren’t normally short-term loans.
With a longer time to repay, these loans are generally for higher dollar amounts than short-term loans. It’s essential that you crunch the numbers and know exactly how much money you need, along with how much you can comfortably afford to pay back. You don’t want to find yourself in a position where you’re defaulting on the loan terms and damaging your new company’s credit scores. Even with higher dollar amounts available for startup loans, you can opt for a lower number to ensure that you can meet the terms and repayment schedule. However, you don’t want to go so low that you’re continually fighting cash flow issues and need a flurry of short-term loans to cover the shortfalls.
How Do You Qualify for a Business Startup Loan?
A business startup loan operates a little differently than other types of business loans. Since you recently opened the business or still need to open it, the small business startup loan looks primarily at your personal credit information. The lender wants to know that you’re a reliable person who takes their debts seriously and will repay the loan on time and according to the terms.
Also, many lenders who offer startup loans want to know that the business idea is sound. For this reason, you may need to find that a business startup loan is only available to you after you start the company. Your lender may require that you’ve been in business for at least six months before offering a startup loan. You may have already been running the business out of your home, and now, you need a startup loan to make a move to a permanent location, hire a staff, and improve your equipment to turn your home company into a small business.
What Is the Minimum Credit Score for a Business Loan?
Since most small business startup loans are looking at your personal credit score instead of that of an established business, lenders like to see a credit score of at least 680.
However, they also look at other information. For example, if your work history shows a background of working in and with other startup companies that became successful, you’re more likely to secure a startup business loan.
While the lenders prefer a credit score of at least 680, you may be required to offer collateral to secure a startup loan or a more general business loan. With a startup business loan, you don’t have the company history that might allow you to offer your accounts receivable or daily credit card sales as a means of securing the loan. You may need to offer your car or home as collateral for a startup loan. It’s also essential that the business has been running for at least six months at the time that you apply for a startup loan. It’s harder to secure capital for a business plan without any actual company doing business.
Can You Get a Startup Business Loan With Bad Credit?
Yes, it’s possible to get a startup business loan with bad credit. However, you’ll need to show a history of experience working for and succeed with other startup companies. The lender may require you to offer some form of collateral covering most if not all the funds you want to borrow. You may need to offer your home or car as collateral.
In the end, you may opt for a short-term business loan that provides cash now to help you grow and also improves your credit score. It’s always beneficial to determine how much you actually need to borrow versus how much you want to borrow. You also need the confidence to know that you can pay back the amount you want to borrow. If you can create a budget that shows how you can afford to repay the loan, then you can gain this confidence.
Also, you may need to shop a lot of offers to find the best one for you. Lendio is an excellent option to start your search for a startup business loan with bad credit because you get results from more than 75 lenders with one credit application. Also, because they may be able to offer you a different option to fund your business ventures since they also work with lenders that specialize in the following types of business loans:
- SBA Loans
- Business Lines of Credit
- Short-term Loans
- Merchant Cash Advances
- Term Loans
- Equipment Financing
- Commercial Mortgages
- Accounts Receivable Financing
- Business Acquisition Loans
How to Get a Startup Business Loan With Lendio
A startup loan for a business helps you grow your company as you work through a fledgling business’s early needs. There are many startup loans available with varied rates and terms. Lendio can help you explore more options for funding with a single application.
The advantage of a startup business loan with Lendio is the access you have to multiple lenders with a single application. It will save you tons of time in preparing documents. When you fill out the online application, Lendio’s experts work with their network of more than 75 lenders to give you the options that are the best fit for your needs. The lenders working with Lendio are significant players in the finance fields, so filling out an application can save you the time and hassle of visiting multiple online banks and lenders.
The application process is easy and generally takes around 15 minutes to complete. There’s a section for providing information about your needs for a loan, personal information, and business information. It’s beneficial to have the documentation you might need ready before you begin filling out the application. You may need to upload certain documents, such as bank statements and photo id.
After reviewing your offers and determining the best options for your small business startup loan, you can expect to receive your funds in two to four weeks.