In the modern financial world, it has become hard to get a business loan when compared to several years ago. Banks and other financial lenders have become more complicated to deal with, considering their strict loan-awarding procedures and processes. This has made it more complicated especially for the new entrepreneurs and business owners due to their low credit scores. Most of these startup entrepreneurs neither have enough funds to finance their businesses nor assets to act as loan collateral. Therefore, with this complicated situation, it is necessary for entrepreneurs to find other means in which they can secure small business loan without having to worry about their current financial situation. Some of the ways in which this is possible is as discussed below:
1. Borrow from Friends and Relatives
If you have a business idea and plan but don’t have funds, you should probably approach friends and family first before heading for other alternatives. This is the
2. Online long-term loans
There are multiple online lending organizations offering both medium and long-term loans to startups. They are similar to traditional banks but do not require security. The repayment period ranges between 4-5 years depending on the amount you are borrowing. The application and approval speed is relatively higher than SBA and bank loans. Most of these loans are offered to existing business but individual with exemplary credit score can access them as well.
3. Online Short-term lending Apps
These are different from the above long-term loans as they offer on a shorter repayment period. Most of them are offered as mobile applications where one fills online forms. The repayment period ranges within 6 to 18 months with daily and weekly repayment options available. Although they are technically expensive than the long term ones, most small business entrepreneurs favor them for their fast and high approval rates.
4. Peer to peer lending
This is different from the above methods as it involves cooperation between lending and borrowing individuals. There are multiple websites that enable the interaction between the two different parties. In short, these
These facilitating systems are built to allow anyone access a lending partner with a click of the mouse. They are also built to review business viability from multiple data points enabling the lenders to make an informed decision. If your business idea is reviewed as viable and concrete, then you will have your loan processed within a short period of time. The ability to have a fast loan approval, low interests rates, and fair repayment terms has made these P2P websites more popular. In this case, you should consider joining one of these marketplaces, present your unique business idea, and get funding from one of the many lenders in there.
This is one of the most popular ways of funding your young business today. Few years back, when a talented entrepreneur got denied bank and government loans, they would normally give up. However, this has changed with crowdfunding opportunities that are financing unique business ideas . Some of the crowdfunding online companies include Kickstarter, GoFundME and Indiegogo. Although you will not receive the funds as a direct loan, you will have an opportunity to get funding from multiple interested parties. The donors may choose to receive a share of your startup, business bonus, or a future reward for their donation. Beyond the funding, you have an opportunity for future business partnership or mentorship . This makes it even better than an ordinary loan with interest rates and complex repayment terms. Therefore, as an entrepreneur, you can choose this option if you lack the money to secure a small business loan in the contemporary world.