5 WAYS A STARTUP BUSINESS CAN GET A BUSINESS LOAN

5 WAYS A STARTUP BUSINESS

CAN GET A BUSINESS LOAN

5 Ways a Startup Business Can Get a Business Loan

5 Ways a Startup Business Can Get a Business Loan

Most entrepreneurs think that because they are only starting their business that there is no chance of them getting a loan. But in reality, there are actually many different financing options that business owners have in which they can qualify, even as a startup.

As you already know, banks REQUIRE good credit AND collateral to get approved for business financing. But still, most people only go to their bank when they need money, because it's the only place they know to go to. But the most common business bank loan, SBA loans, only account for 1.1% of all business loans (Department of Revenue 2013). The reality is that the big banks are NOT the suppliers of most business loans. And even though they require good credit and collateral to qualify and longevity in business, many sources don't.

The big banks are very conservative, as most know. Due to this they commonly won't lend to businesses in which the business owner has challenged credit or businesses that don't have collateral or companies that are in their first two years of operation. But even though startup businesses don't succeed, many can and will if they receive proper capitalization. And many business loans make really good sense and have risk low enough based on other factors, even if the business is just getting started. So what types of funding can and can't you get for a startup?

Before you know where to go to get money as a startup, you first should know where

NOT to go. These sources might be appealing based on their offers and promotions, but they will not typically lend money as a startup. SBA loans, conventional bank financing, even private investor money, all have stringent requirements and usually require longer time in business for approval.

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5 Ways a Startup Business Can Get a Business Loan

Where NOT to Get Financing as a Startup

SBA and other bank conventional loans are tough to qualify for because the lender and SBA will evaluate ALL aspects of the business and the business owner for approval. To get approved all aspects of the business and business owner's personal finances must be near PERFECT. There is no question that SBA loans are tough to qualify for. This is why according to the Small Business Lending Index, over 89% of business applications are denied by the big banks.

Many people think that when they are just getting started a private investor is the best answer. But in reality investors typically want average or better credit of 650 scores or higher in most cases, and they almost always want you to pledge some type of collateral. They will also want solid financials for at least two years. This means they'll want to see tax returns showing large net profits that are increasing over time. Think of private money as being for SBA and conventional bank loans that just miss the mark.

Where TO Go to Get Financing for Startups

Unsecured financing is the best type of financing for startups.This financing requires no collateral for approval, and many startups don't yet have collateral so unsecured financing is a perfect fit. And the loan amounts are the highest with unsecured financing of all other startup loan options. And rates are low, the lowest you'll find on initial startup money.

5. Unsecured Financing

Unsecured financing usually comes in the form of credit cards or credit lines. The difference between credit cards and credit lines isn't much. With credit cards you will pay a higher fee to take cash out than with credit lines. But you will also get a much lower "intro" rate with cards that you won't get with credit lines. And with almost all credit lines, you'll need to show tax returns for approval, meaning they don't work

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of this work, in whole or in part. If you would like to use any portion of this material in a book, article, e-zine, newsletter, radio, or television broadcast,

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5 Ways a Startup Business Can Get a Business Loan

well for startups.

Business cards work VERY well for startups and you can get a multitude of cards with very high limits. And the best part is that they usually come with 0% intro rates for the first 6-18 months. This means you won't be forced to pay high fees and interest during the crucial starting phase of your business.

You won't want to go out and try to find the best card for your business, that's for amateurs. Instead, you'll want to get the MOST amount of money, best cards, and at the best terms. To get this you'll want to work with a lender who offers a program known as Unsecured Business Financing, or UBF.

With UBF you can usually get five times the amount of money you would get on your own when applying for a credit card. The reason for this is that most true business cards won't approve you unless you have two inquiries on your credit report. So if you try to go out and find some cards to apply for then start to apply, no matter how good your credit is you'll start to get denied because each time you apply another inquiry is added, and with only two of those you'll disqualify.

But UBF lenders know the business card world, and they know it well. This provides you some major benefits that won't get when applying by yourself. Firstly, they know the sources that will give you the most amount of money based on your unique situation. And they then apply for credit in a certain order and in a certain time frame to get you approved for the highest limit cards you can get, and get multiple of them.

Using UBF you can usually get five cards that mimic your highest limit revolving account reporting on your credit now. So if you have a $10,000 credit limit account now on a credit card, the lender will usually get you up to five other $10,000 limit cards totaling $50,000.

We once tested this with a client with over an 800 score. He wanted to go to his bank to get the most unsecured financing he could get, and we helped him with all aspects of preparing his application perfectly. He got approved for $12,500 in funding. But our UBF lender got him approved for $75,000. This is the case with almost all UBF financing; you can get up to five times what you'd ever get by applying on your own.

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?2014 Credit Suite, all rights reserved. No reproduction or use of any portion of the content or work or the entire work is permitted without the express written permission and authorization of the publisher. However the publisher of these materials routinely grants authorization for reproduction or use

of this work, in whole or in part. If you would like to use any portion of this material in a book, article, e-zine, newsletter, radio, or television broadcast,

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5 Ways a Startup Business Can Get a Business Loan

And with UBF you get REAL business credit cards. This means they don't report to the consumer reporting agencies like most "business" cards you'll find. Instead they report your credit to the business reporting agencies. This is a really BIG deal because 30% of your consumer credit score is based on how much of your credit you're utilizing. So if your business cards report to the consumer agencies and you charge more than 30% of the limits, you can tank your scores 100 points or more, making it harder for you to get other business financing.

These cards help you build your business credit as well as get you money, another thing that's a BIG deal. It's actually huge because as these accounts report you are building a business credit profile for your EIN that's not linked to your SSN. And you are building this profile with high limit cash cards. This means within a few months you can then use your newly established business credit profile to get even more, high limit cards. These new cards will come with no personal guarantee or liability from you, and won't even require a personal credit check saving you from the consumer credit inquiry.

And these cards usually come with 0% intro rates for 6-18 months. This means you can keep payments low as you start building your business. Most businesses do fail within their first year of operation due to lack of capital. So this 0% rate can literally save your business. You will need good personal credit to get approved, such as a 700 credit score or higher without any recent derogatory items reported.

You can be approved for as much as $150,000 in unsecured financing. We often see approvals as high as $50,000 on single cards. Your actual approval amount will vary based on what your highest credit limit accounts are now. Usually, expect to get five cards that are equivalent to your highest limit account you have reporting now. High approval amounts with 0% rates are only a couple of the main reasons UBF is the best financing type for startup businesses.

4. Asset Based Financing

Asset based financing, also called collateral based lending, lends you money based on the strength of your collateral. Since your collateral offsets the lender's risk, you can be approved with credit issues or as a startup and

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of this work, in whole or in part. If you would like to use any portion of this material in a book, article, e-zine, newsletter, radio, or television broadcast,

pod cast or in any other seminar teleconference or other events or publications please e-mail: info@ or Call (877) 600-2487

5 Ways a Startup Business Can Get a Business Loan

still get REALLY good terms. Common BUSINESS collateral might include account receivables, inventory, and equipment.

With account receivable financing you can secure up to 80% of receivables within 24 hours of approval. You must be in business for at least one year and receivables must be from another business. Rates are commonly 1.25-5%.

You can also use your inventory as collateral for financing and secure inventory financing. The minimum inventory loan amount is $150,000 and the general loan to value (cost) is 50%; thus, inventory value would have to be $300,000 to qualify. Rates are normally 2% monthly on the outstanding loan balance. Example is a factory or retail store.

With equipment financing lenders will undervalue equipment by possibly up to 50% and work with major equipment only. Lender won't combine a bunch of small equipment, and first and last month's payments are required to close. Loan amounts are available typically up to $2 million. And you can also get equipment financing and leasing to purchase equipment for a brand new startup business.

Common PERSONAL collateral that can qualify for collateral based lending might include a 401k and stocks. 401k or IRAs can be used to obtain up to 100% financing and rates are usually less than 3%. A retirement plan is created allowing for investment into the corporation. Funds are rolled over into the new plan. The new plan purchases stock in corporation and holds it. The corporation is debt free and cash rich.

With securities based lines of credit you can obtain an advance for up to 70-90% of the value of your stocks and bonds. These work much the same as 401k financing with similar terms and qualifications.

3. Equity Financing and Crowdfunding

With equity financing you exchange a percentage of ownership in your business for financing, much like on the TV show Shark Tank. Personal credit is NOT an issue nor will you need to provide collateral, but equity

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5 Ways a Startup Business Can Get a Business Loan

investors are looking for a tested and proven concept and sales really help approval. You might find some investors to invest in a concept only, or invention. But most will want to see that you have an operating business that's earning money and making profits.

And expect that they're going to want a large piece of the equity. For it to be worth their time to invest, they might want 10-60% ownership of your business. That means they'll be taking a large part of your future earnings, something you want to consider before recruiting an investor.

There are lots of websites in which you can obtain crowdfunding for your business. This type of funding gathers money from a "crowd", or a lot of people instead of one big investor. If the crowd likes your idea, they may donate money to your project. Much of crowdfunding doesn't need to be paid back and many investors are people you know. But if you really look into crowdfunding, you'll find there are all types available.

Some types of crowdfunding sources do want a certain percentage of return; some want a percent of equity ownership. And there are different sources and platforms for different needs, and even unique niches or industries. So make sure you find the right crowdfunding platform for you before you post a project.

2. Other Unique Startup Loans and Grants

There are also a lot of little-know sources of grants and loans for startup businesses, even more that might be specific to your state. One source if you are in the web technology business is AngelPad which was created from a bunch of prior Google guys.

Beatspring is another source that specializes in helping businesses get funds to get started. They have a program that can get you as much as $20,000 to get your new venture off the ground.

First Round Capital is a company that lends large amounts of money to startups. You can actually secure financing in the millions-of-dollars with First Round. Jumpstart

?2014 Credit Suite, all rights reserved. No reproduction or use of any portion of the content or work or the entire work is permitted without the express written permission and authorization of the publisher. However the publisher of these materials routinely grants authorization for reproduction or use

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of this work, in whole or in part. If you would like to use any portion of this material in a book, article, e-zine, newsletter, radio, or television broadcast,

pod cast or in any other seminar teleconference or other events or publications please e-mail: info@ or Call (877) 600-2487

5 Ways a Startup Business Can Get a Business Loan

is another company that offers startup capital, but on a really small scale. With Jumpstart you can secure as much as $15,000 for your startup.

Launch is an organization that holds big competitors for companies to get startup funding. During a single competition they've raised as much as $500,000 to help businesses get started. Launch and other companies like them have been really making waves helping startup businesses get money even when most lenders won't consider a loan.

As a startup you can even get financing for the sole purpose of getting a commercial sign for your business, or getting a graphic wrap to use your vehicles for advertising. This gives you some select programs that will get you financing for a single purpose.

1. Business Credit

Business credit is a great way to get money as approvals are not based on personal credit and no collateral is required for approval. Business credit reports usually get started with a few vendor accounts who will initially offer credit. Initial accounts create tradelines and a credit profile and score are established. The company's new profile and score are used to get credit. Newly obtained credit is based on the company's credit per the EIN, not the owner's credit based on the SSN. Personal credit doesn't matter as the credit linked to the EIN is used for approval.

When you use vendors to build your initial credit, you can then leave your SSN off of the application and can apply for business credit based solely on your EIN at most retail stores. Plus, you can get cash credit also, like high-limit cards with MasterCard and Visa. But building business credit all starts with vendor accounts. Without them, you won't be able to start your credit profile initially, and that profile being established is the key to getting cash and store credit cards for your business.

Once you find the vendors you want to apply for, apply, and use your credit, it takes about 1-3 months for those accounts to report to the business bureaus. Once those accounts are reported a business credit profile and score are then established, and that can be used for you to get store credit cards next. Once you have about 10

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?2014 Credit Suite, all rights reserved. No reproduction or use of any portion of the content or work or the entire work is permitted without the express written permission and authorization of the publisher. However the publisher of these materials routinely grants authorization for reproduction or use

of this work, in whole or in part. If you would like to use any portion of this material in a book, article, e-zine, newsletter, radio, or television broadcast,

pod cast or in any other seminar teleconference or other events or publications please e-mail: info@ or Call (877) 600-2487

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