Wednesday, September 9, 2015

How Taking out a Business Loan Can Help Get Your Startup off the Ground

Small business owners require many things to find success—a brilliant idea, an expert team, and a clear plan. But even when business owners have ambition and intelligence, it means nothing if they don’t have the necessary capital.

If you have all the ingredients for a strong startup except the initial cash, consider how a business loan can help you.

What Can a Business Loan Do for You?

A business loan will help get your startup off the ground financially. You will need the money up front if you want to have any chance of being successful as most new businesses fail within the first five years of when they are started. While each business has different startup costs, a business loan can cover the common expenses outlined below. 

Supplies and Inventory

When you first start out, a loan can help you make initial orders, restock items, expand inventory, and advertise your business. It can also cover the cost of office furniture, electronics, and other equipment.

Advertising and Promotion

People must know about a business in order for it to find notoriety and influence. If you’ve just started out, advertising and promotion play a vital part in your success. Use a loan to make your business known and get people talking. 

Legal Fees

You should seek legal aid to protect yourself, your clients, and your business. This step ensures you have valid business agreements, permits and licenses, liability waivers, and other legal documents. A loan can help you pay for this sometimes costly necessity. 

What Business Loan Options Do You Have?

If you think your startup would benefit from a loan, you’ll want to know your options. While you can find many choices, including crowdfunding and peer-to-peer loans, business owners often turn to lines of credit as well as short- and long-term loans. 

Lines of Credit

With a line of credit, a business can access income when it needs it—much like a credit card—instead of a one-time lump sum. And when you don’t need the supplemental income, you don’t have to worry about payments.

This loan helps if you have intermittent cash shortages, like seasonal dips in sales, or unexpected costs. It acts as a safety net that you can use when necessary, pay off quickly, and then use again later.

Short-Term Loans

These loans offer a solution for businesses with relatively simple investments: small projects with quick return. Instead of monthly payments, business owners pay these loans off in full at the end of a set time period. 

Long-Term Loans

Business owners might use this option for an investment that yields profit over time. Expansion, construction, and acquisition often require a long-term loan. 

You likely need a strong financial history and a significant down payment to secure this loan type. However, long-term loans tend to have lower interest rates than short-term loans. 

With all of these different types of loans, you may want to consider going through a company like Loan Builder, to build your own loan. To put it simply, no one knows your business better than you. No one know your business finances better than you. 

By building your own loan, you know exactly what it is you need to make your startup a success and therefore building your own loan might be your best bet (Source:

Whatever your dream, don’t let lack of cash keep you from it. If you only need some extra money to get your startup off the ground, find a loan that works for you.

1 comment:

  1. I think that raising some VC money is better than getting a loan. With a loan, you have to pay it back within a specific timeframe. If you can get investors that aline with your goals, you can use their money "forever".


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