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• 12 Apr

  Business Loans For New Start Up Companies

  There is an appetite for lending to startup companies, whether or not the Directors are homeowners. Not all lenders deal with start-up loans but there are some that do and there are also plenty of alternative funding options.

  Startup Loans

  This may be good news if you are considering starting a company and need some capital from a startup loan to get you up and running.

  GET START UP LOAN QUOTES

  Business Loans For Startups

  A business loan is a simple form of financing whereby a capital sum is advanced and repaid over a fixed term in regular instalments with interest. The lender includes a premium on the interest rate that is charged. This can be a great way to get the money to start a new business venture.

  Lenders That Offer Start Up Loans

  Business loans can be provided to new start-up companies. It is not the case that all lenders will provide commercial loans to startups. Some require that all businesses that they lend to have been trading for two years or more. Therefore, a new startup will not always qualify.

  It is also the case that some of the banks do not wish to provide loans to new start-up companies, so you may have already been rejected for finance or you may be struggling to find lenders that can help you.

  However, there are some lenders that offer start up loans and are prepared to finance new businesses. We can connect you with providers that can help of even offer alternative funding solutions.

  How To Apply For A Start Up Loan

  These are the steps to apply for a start up loan:

  1. Determine how much money you actually need. See our article about How To Calculate The Funding You Need.
  2. Decide which type of loan you need (a broker can help). For example, government-backed, a bank loan, a commercial loan or a microloan.
  3. Check your credit score and eligibility criteria.
  4. Prepare key documentation such as your business plan, cash flow projections, personal/bank statements and identification documentation.
  5. Compare lenders and submit your application. See our article about: How To Get A Small Business Loan.
  6. Receive the finance. The funding is normally paid into your company bank account after to complete any required documentation and provide any required security.

  The Benefits Of Financing A New Business With A Loan

  The benefits of financing a new business with a loan include:

  • Loans are simple to understand.
  • The amount of capital provided is also clearly defined.
  • Repayments are easy to quantify and budget for.

  The Drawbacks Of Business Loans For New Start Ventures

  The drawbacks of business loans for new start ventures include:

  • Loans don't grow as your business grows (invoice financing will grow with you).
  • Loans can be less available than facilities such as invoice factoring.
  • You may have to give additional security to get a loan.

  Alternative Finance For Startups

  There are other alternative sources of business finance available to new companies, besides a traditional business loan. For example, startup receivables financing, whereby funding is provided against the outstanding book debts of the company, is freely available to businesses including those that are newly formed. There is no requirement for a track record.

  See this related article about: Invoice financing for new start-ups.

  In addition to providing the funding, there are a number of other outsourced services that may be beneficial to a newly formed business. These include running your credit control for you, operating your payroll on your behalf and protecting your company against bad debts.

  Watch our video: Will Banks Lend To Startups?

  Start-up Capital

  If you are considering starting a new company we would be happy to discuss your funding requirements with you and put you in touch with lenders that are happy to assist start-ups.

  Call us on 03330 113622 to discuss the funding your new company needs and to find out if you could be eligible for a startup loan.

  By Glenn Blackman