How Start Up Business Loans Work

Using Personal Assets To Fund a Start Up

We recommend that you first consider personal assets to finance your startup. This is usually cheaper than getting a business loan.

A popular way to use personal assets is with a Rollover for Business Startups (ROBS). A ROBS allows entrepreneurs to invest their retirement money into their business without having to pay any income taxes or early withdrawal penalties. If you have over $50k in retirement accounts, speak to a ROBS professional at Guidant Financial.

Other popular ways to use personal assets is with a home equity loan or a family and friend loan.

A lot of business owners hesitate to invest personal assets in a business, thinking that they will lose those assets if the business fails. However, even if you get a business loan, you will most likely have to provide a personal guarantee. In other words, whether you use personal funds or get a business loan, your personal assets are at stake. Therefore, it makes sense to first assess if you have any personal funds that you can use towards your startup.

Start Up Business Loans

If you have no personal assets to rely on, we can help you get a start up business loan. Here are some types of business loans we can arrange for your startup:

Personal Loans

Businesses that are pre-revenue (brand new or still in the idea stage) will usually have the best chances of getting a loan by seeking a personal loan. Qualifying for a personal loan typically means having a credit score above 660 (check your's here for free) and having an income. Personal loans will typically have a max size of $50k and an average APR of 14-20%. Online personal loan providers, like Lending Club, offer same-day approval and can have funds in your account quickly.

Small Business Credit Cards

Another good financing option for small businesses that are pre-revenue are small business credit cards. Not only do they give you a flexible line of credit, but many have low introductory rates and generous rewards programs. Qualifying for a good business credit card requires a credit score above 660 (check your's here for free). Find the right small business credit card here.

SBA Loans

SBA loans are typically given to existing businesses, but startups are eligible too. If you have an excellent credit score, a down payment of at least 20 %, and industry or business management experience, you may be able to get an SBA loan for your new business.

Line of Credit

Business owners with strong personal credit scores may be able to qualify for an unsecured line of credit of up to $150,000. Interest rates range from 8-24 %.

Non-Profit Microloans

Brand new startups can get microloans to get their businesses off the ground, and businesses that have been operating for a few months with revenue can get larger amounts of capital.

Invoice Factoring

Invoice factoring lets startups with unpaid invoices turn those invoices into capital. It’s a great way for new businesses to stabilize cash flow while waiting to get paid for goods and services. The amount you can borrow is limited by the value of your outstanding invoices.

Purchase Financing

We can help you buy equipment, inventory, or other essential goods and services for your startup. Purchase financing is available for startups that need to make a one-time purchase or need a continuous line of credit.

Merchant Cash Advances

With a merchant cash advance, startups can get money in exchange for a portion of their daily credit card sales. On days that your business does well, you pay more. On slow days, you pay less. There’s no deadline to pay back the loan. Many startup owners like the flexibility of a merchant cash advance, but they can be really expensive, so we’ll first consider you for lower cost options.