Entrepreneurs often find it difficult to obtain loans for their startups. An alternative is to find equity investors, but this has the significant disadvantage of relinquishing a measure of control in your business. When you take out a loan, though, you retain full company control. Here are some tips on how you can accomplish this.
Assess Your Available Collateral
If you have personal assets that you can put up as collateral, you will find it much easier to obtain a loan for your business. This collateral may include savings, stocks, home equity, inventory, or equipment. However, keep in mind that if you default on the loan, the bank can take over your assets and sell them.
Start a Franchise That Is SBA Approved
Before applying for a loan for startup funding to open a franchise, make sure it is on the U.S. Small Business Administration Franchise Registry. This will increase your chances of obtaining the loan and also make the application process easier.
Lease Your Equipment
Rather than taking out a loan and purchasing the equipment, you require for your business, consider leasing it instead. Leasing companies may approve your application based solely on your credit, and you will be able to obtain the equipment you need to get started.
Consider Purchase Order Financing
For companies that need capital to pay suppliers so they can fill orders they have already received, purchase order financing is a viable option. In this form of startup financing, lenders advance funds directly to suppliers so you can ship the products that customers have ordered.
Factor Your Invoices
Sometimes your business customers do not pay for your products or services immediately. However, if you need funds quickly, you can factor in your invoices. A lender advances you a large percentage of the value of the invoices, and then you receive the balance, minus a factoring fee after your clients have paid their bills.
For more advice on obtaining startup funding, get in touch with Aspen Capital Solutions.