When you’re looking for business lenders, one problem will always come up. That’s the challenge of minimum time in business limits. Even the most lenient lenders will often insist that you have 3 months in business. Otherwise, they won’t even consider you for a loan. So, getting a business loan for a new business can be challenging. Especially if your business hasn’t even opened yet!
Fortunately, there are still options for you if your business just opened up. So, let’s go over some of the ways you can get a business loan for new businesses.
How To Get A Business Loan For A New Business
Here are a few loan options for new businesses.
Local governments and the federal government may have some grants to help you. These grants can be provided by the Small Business Administration, which also provides loans. These grants can be found on the government directory for business grants.
Of course, getting a grant isn’t always possible. While we can’t guarantee your approval, it’s worth it to look for any government grants you can qualify for. They are easily the most affordable source of business financing.
Startup Business Loans
If you don’t have access to grants, you’ll have to start your search by finding available business startup loans. These are the loans that are available to businesses that haven’t quite gotten started.
Startup business loans typically go towards the essential needs of a new business. This includes working capital, which covers:
- Construction expenses
These expenses can be covered by microloans from non-profits. You can also try to get help from the SBA.
Some SBA lenders provide microloans of up to $50,000 for starting a new business. The average microloan from the SBA will be about $13,000.
The SBA loan with the most potential is their primary SBA 7(a) loan. These loans can be used to start a new business. But they most often go to established business owners who can provide collateral. But there are also instances where they provide these loans to less established business owners.
There are some non-profits you can look into for microloans as well. Many of them will provide business loans for a new business to minorities or those located in a community that is struggling. The best part is that you will usually get good rates and terms from these non-profit lenders.
Both personal and business credit cards can help you finance a new business. You will need access to larger amounts of credit. So, try to get your credit providers to raise your credit limits on any cards you have. This will be much easier to do if you have a high credit score. In many cases, all you need to do is ask. But of course, if you have poor credit, they won’t be as enthusiastic to increase your credit limit.
Applying for new credit cards with advantageous rewards is another worthwhile step to take. It also helps if you can apply while you have a strong credit score.
How To Get A Business Loan For A New Business Step-By-Step
Step One: Brainstorm
You will need to know what you need before you apply for a business loan for a new business. This information includes how much your startup costs will be. Do the math on what expenses you need to be covered. Be sure to include:
- Office supplies
- Lease or real estate purchase
Your loan application will have to include exactly what you’re planning to finance. The more detail you can go over before you apply, the better off you’ll be.
Step Two: Get Ready To Apply
You will need to prepare many documents to get any business loan. You should refer to our business loans page for a complete explanation of how to get a business loan.
You’ll need everything you prepared while brainstorming. Then you’ll need much more. So, make sure you include your detailed business plan and a comprehensive list of all your expenses. You can use our business loans page as a checklist.
Step Three: Qualify Yourself
Now you just need to find the lender that you qualify for and offers you a good deal. While most business loans have time in business requirements, there are a few options that don’t. But if you have three months’ experience running a business, you should qualify for plenty of loans. Also, your revenues and credit score will help you get a business loan for a new business.
So, make a quick checklist of business qualifications that can help you get a business loan. Make sure to include:
- Business experience
- Credit score
Once you’ve done that, you can match your qualifications with the requirements of lenders.
With a minimum time in business requirement of 2 months, Yalber is a good option for young businesses. Read more about their financing here.