To start a business, having a dream and lofty ambitions isn’t enough. You also need a large amount of capital. It’s incredibly easy for large businesses to get a loan because they have a financial track record and established credibility.
But you’re just starting out and your company is yet to break even. This makes it harder to get approved for a loan since lenders don’t know if you’ll be able to pay it back.
But don’t worry, there are plenty of workarounds to this. In this article, we’ll show you how to get a startup business loan with no money. Lenders know most startups don’t have a lot of money, so they look at other factors when you apply for a loan. Here are 5 things you can use to get a startup business loan:
1. Have a Solid Business Plan
Your business plan is perhaps the most crucial factor in helping you secure a loan. It must be clear and detailed, so lenders can know that you understand your business and have a strategy in place to rise above the competition.
Lenders usually look at your financial projects and how you plan to achieve your expected revenue and profits, so make sure this part of your business plan is solid.
But don’t neglect other areas of the plan! You’ll have a much higher success of being approved for a loan if your business idea is innovative and has clear potential to become successful.
Lenders may also look at your profile to learn more about you. We recommend you use a public records search service to see what information of yours is available publicly.
2. Take Advantage of Business Credit Cards
Business credit cards are just like regular credit cards. They help you build a credit score for your business, which makes it easier for your startup to get approved for a loan in the future. Many business credit cards offer exclusive rewards such as cash back on equipment you purchase for your company.
To get a business credit card, you must have a good personal credit score (700 above). You’ll be required to provide a personal guarantee, which means you’ll be held responsible if your business fails to repay any outstanding debt.
3. Consider Equipment Financing
Equipment financing is when you borrow equipment for your startup without paying the full cost upfront. Whatever you choose to borrow is considered collateral, which means it belongs to the lender and can be repossessed if your business fails.
Equipment financing lenders will not look at your cash flow, but you will have to show them your business plan and projected revenue. You’ll be asked to make a down payment. After you’ve received the equipment, you’ll have to repay the loan in regular installments.
4. Utilize Crowdfunding
Crowdfunding sites, such as Indiegogo, SeedInvest, and GoFundMe, are great places for startups to get a loan easily. These sites can help you find people who are interested or equally passionate as you about your business idea.
You can launch a crowdfunding campaign and link it to your business’ social media profiles on Facebook and Twitter to attract an even larger audience. Most crowdfunding sites have their own fees, so make sure you read their terms and conditions before starting your campaign.
They also have a vetting process, so be prepared to answer a lot of questions and submit documents.
5. Microloans
Microloans are generally easier to obtain because their requirements aren’t very strict. These loans are meant to support startups and entrepreneurs who have little or no money. Compared to traditional startup business loans, microloans are very small, ranging from $100 to $50,000.
Many lenders offer flexible repayment schedules, but some may have tighter repayment terms. Microloans don’t involve any collateral and they’re usually granted after a careful evaluation of the business plan.
You can learn more about microloans and how to get them by visiting the U.S. Small Business Administration (SBA) page.
Ready to Fund Your Dreams?
Don’t worry if you’re just starting out and your business doesn’t have any money. As you can tell, there are many ways to get a loan for your startup, even if it hasn’t started generating any revenue.
Just make sure your business plan is convincing enough to win the support of potential lenders and investors. Explore modern crowdfunding platforms and interact with people who are enthusiastic about your business idea because they will be your biggest and most dedicated supporters.
