how to get small business loans

How can you easily get small business loans for your small startup?

At some point, every business needs funding, most notably, startups that have to deal with starting costs and ventures in business for years need funding for growth and working capital.

The kind of business that you are into determines the funding options you can go for. In this article, we will take a look at proven ways to get business loans to start or maintain your business.

It is therefore important to make sure that your business loan search corresponds to the type of business you do. It will be a total waste of time, money, and energy looking for the wrong funding for your business.

No doubt, there are reasons people look for ways to borrow money online, and starting a business is one of the reasons.

According to statistics, the odds are against startup businesses. This is mainly due to the fact that less than half of startup businesses stay afloat for 5 years and one-third of that number survive for ten years.

This does not mean your business will not succeed. That is why this article is put together so that you can make the right decision on the funding your business needs.

So come, let’s explore the proven ways to get small business loans.

Loan Service Providers

This is one great option of getting small business loans that every startup looks into.

Loan service providers are mainly set up to provide loans either personal or business option. These loans either help your business grow or even start up a new business as an entrepreneur.

Fortunately enough, due to the widespread technology and internet use, there are many loan service providers.

Loan service providers give loans to entrepreneurs without heavy collateral or heavy paperwork like banks require.

Different loan service providers give loans at different interest rates, and different amounts ranging from N10,000.

Government Loan Schemes

These schemes are set up by the Government of every country, in order to alleviate poverty and reduce the rate of unemployment.

These schemes include loans, grants which you don’t have to pay back. All you are required to do is to enroll in the training program and at the end of the training, you will be given cash in order to start up your business.

These schemes are also there to improve the economy of each country, as individuals are encouraged to involve in entrepreneurship.

This scheme however is sometimes restricted to the educated with tertiary education certificates.

These grants include Bank of industry loans, Bank of agriculture, and other list of government grants for individuals.

The requirements of these loans include School certificates and Valid identification. This is definitely one of the best options to get small business loans in any country.

Banks and Other Financial Institutions

MOST entrepreneurs don’t like to go for this option due to the extensive paperwork, time involved, high-interest rates, and the probability of the loan not approved.

This is why many people prefer to go with private loan service providers as discussed above.

Before you can obtain a loan from any bank institution, your business should be aged 2 years or more and it must have financial stability and assets that can be used as collateral.

This type of loans does not fall under the unsecured loan category, you have to present value to be held as security should you default.

Without collateral, it can be quite difficult to successfully obtain a loan unless you have a very good credit history and a Guarantor who is stable financially to pay up your debts in case you can’t.

You can obtain loans from most of the banks available in the world. Many of them however have different terms and conditions set out before they give out loans.

It’s your job to go for the one that best suits your needs.

Angel Investors

Angel investors are private people or little gatherings of administrators who put resources into businesses, generally by making an equity buy.

They can give money, guidance, and direction to help start and grow a business. They are one of the great ways to get small business loans.

Getting an angel investor can be extremely difficult on the grounds that the speculator needs to see growth potential and a practical business plan with a sensible exit strategy.

On the off chance that you can’t get enough money from the bank or your own assets and you don’t have a rich family member, you can generally search for a well off non-relative.

Some wealthy people like to put resources into startup adventures frequently, in return for an equity stake in the new business.

These investors are known as angel investors. Regularly, an angel financial specialist has been successful in a specific industry and is searching for new lucrative grounds within the industry.

Not exclusively can angel investors offer financing to get your business off the ground, yet some are happy to give direction dependent on their own experience.

They can likewise use their current contacts inside an industry to make your business grow quickly.

So, how would you discover these angels? It might require tedious research.

Numerous angel investors want to stay under the radar and must be recognized by asking different business proprietors or money related guides.

Different angels have joined networks, making it simpler for potential startups to find them.

Friends and Family

If you don’t have enough savings to invest in your business, and you neither have collateral nor a good credit history, another option is to look at people around you such as family and friends.

This is a possible source of small business loans. This is because it is easy to convince your friends and family than a bank that does not know you.

Friends and family will also not look at your credit score or ask you for assets or collateral before you can get a loan from them.

Also, repayment terms are likely easy and you might not be required to pay an interest rate on any loans you get. Everything is just perfect.

One thing, onsidering loans from friends and family is that your relationship can be strained if you take too long to repay or if the venture fails and you are unable to repay your debts altogether.

So, it’s better you sit down and discuss in details with your friend or family on repayment terms.

Related: Tips for getting student loans successfully

Crowdfunding

Crowdfunding is a new option to get small business loans.

If you have tried to obtain loans from banks, loan service providers, angel investors or friends and family, but all come to no avail, you can turn to crowdfund.

As the name implies, crowdfunding is the process of raising funds from a lot of people for your business’ sake.

For this to happen, you have to be able to bring your crowd together and let them know about your business.

A platform that allows that is the internet. I mean, what can we do today without internet.

Through the internet, you can propose your business ideas, send out copies of your business plan to people as much as you want.

This proposal is meant to be written in such a way that it will be viable, lucrative, and convince potential investors to invest in your business.

You do not have to know these people. You can make your proposal on different social media platforms and websites like LinkedIn.

Through their investment, they have returns on their investments depending on how well your business grow.

So your proposal has to be clearly written, well defined and you have to let investors know you have knowledge of the market you are venturing into and required entrepreneurial skills.

You should also check out this list of the best mobile loan apps in Nigeria to get personal loans into your bank account in no time.

Getting Small Business Loans (Summary)

Gathering funds to start up a business venture takes a lot of time, energy, and planning. Well, unless you are already a millionaire.

But if you are not, it is necessary for entrepreneurs to check which options are available and well suited to the type of business they want to do.

The purpose of going into a business is to make profit, so every step you take have to pull you in that direction.

In this article, we have been able to break down funding options to get small business loans.

All these options are laid out to help you in your decision-making process on which type of loan is suited for your business.

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