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How to Get A Low Cost Business Start-up Loan

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Published: 28Aug2010
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If you dream of starting your own business, don't let the challenge of financing discourage you from making that dream come true. Many successful business owners today have been able to take the first step through the help of business loans.

In this article, let us explore different types of business start up loans available in the market. Let us also tackle the steps you can do to increase your chance of getting approved for the business financing you seek.

Secured or Unsecured Business Loan

You can choose between a secured business loan and an unsecured business loan, whichever is more practical for your situation. If you have a valuable property that you are willing to use as collateral, then secured start-up business loans have lower rates and more flexible repayment terms. You can also obtain a higher loan amount because your debt is secured by the property you submitted.

On the other hand, if you are in the position to provide collateral, you may opt to apply for an unsecured business. Although the available loan amount may be limited and you may have to pay higher interest rate, unsecured business financing will still give you the chance you need to start up a business.

Start Up Business Loans and Personal Credit

One important factor that you should prepare for before applying for a start-up business loan is to raise your personal credit score. Since you are about to start up the business, you have yet to build corporate credit. Needless to say, a lender would be more confident to provide financing if your personal credit history shows that you are a responsible borrower.

Are you aware of your credit standing? Order a copy of your credit report from the three major credit bureaus. Carefully check your credit report for errors which can hurt your score. If you see some items that need to be corrected, write a letter to the credit bureau that issued your report and send it via registered post mail. Be sure that you submit your current payments on time and avoid maximizing your personal credit lines.

Having an excellent credit standing will not only improve your chance of approval but also enable you to get lower interest rates. This is why it is recommended that you check your credit report at least six months in advance before submitting your business loan application.

Check Prerequisites of the Business Loan

As a start up business, you will also be required to submit your business plan. This important document must clearly define the structure of your business as well as your company's mission and vision. It should also contain results of the marketing studies that you have conducted including your target market and advertising strategies that you plan to implement.

Spend time creating your business plan, paying special attention to the smallest details. Of course, you must present a well-prepared business plan in order to convince your lender that you are worthy to be given the financing you seek. .

Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to start up business financing, SBA loans and business equipment leasing.

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