Business Funding For Startups | 4 Types Of Startup Funding
Business funding for startups is available from various types of lenders. However, because more people than ever are attempting to launch new businesses, the competition for getting any money is fierce and getting fiercer. Even if you can get financed, the odds against making it in business long enough to reach your exit strategy are very high, even for the most diligent entrepreneurs.
This article looks at 4 of the best options today for obtaining business funding for startups. Note that all of these types of lenders have requirements that applicants must meet in order to get loans. Many startups are unable to deliver on these requirements, and therefore do not qualify to borrow the money they need.
Business Funding for Startups: Microloans
The US Small Business Administration provides SBA microloans for up to $50,000. This business funding for startups can help a new company launch operations or expand an existing small business. The average value of an SBA microloan is only $13,000, a number far less than what many startups require to gain any traction in the marketplace. Microloans come with interest rates between 8% – 13%, have to be paid back within 6 years, and the funds cannot be used to cover existing debts.
Business Funding for Startups: Crowdfunding
Crowdfunding is bigger than ever and projected to continue growing exponentially. However, crowdfunding may not be the best option of obtaining business funding for startups. Hundreds of thousands of applicants try to get this type of funding every year and most of them are rejected. If you decide to pursue this type of startup funding, be sure to have a professional business plan ready with an excellent presentation. You’re going to need to stand out in a crowd to get any money.
Business Funding for Startups: Angel Investors
Angel investors are wealthy individuals who are looking for exceptional business opportunities to invest in. Some angels like to invest in business funding for startups, however, they want to exchange their money for a chunk of the entity’s equity. Many angel investors have experienced a lot of success in a particular industry and are therefore only looking to back startups in that same realm. If you can get their attention, angels can provide the money you need and open a lot of doors to help your business gain traction.
Business Funding for Startups: Alternate Lenders
Alternate sources of business funding for startups include private lenders, credit unions, and some smaller banks. Unlike many funding sources, these lenders typically do not require collateral, income verification, or even tax returns. Generally, if an applicant has an excellent FICO credit rating (700+) and is free of liens or collections, then she stands a good chance of getting the money she needs via these nontraditional lenders. Unsecured Business Loans has provided business funding for startups in amounts up to $200,000. This option for obtaining startup funding grows more popular every day as multitudes of people continue to get rejected for highly-competitive loans from other sources. Contact our forward-thinking team today by filling out this short inquiry form Apply Now to apply for the startup funding you need now. Successful applicants have their funds within fifteen days in most cases.