Starting a business is one of the biggest decisions you’ll ever make. Not only does this impact your professionally, but it does the same on a personal and financial level.
As you create a business plan and inch toward launch, you may come to find that you don’t have the money required to get up and running.
Fortunately, there are several places you can turn for funding, including but not limited to:
- Startup business loan
- Personal savings
- Credit cards
- Home equity loan or line of credit
- Personal loan
- Family and friends
While it’s important to consider all these options, many founders find that a startup loan checks all the boxes.
Here are some of the top benefits of opting for a startup loan, as opposed to one of the other choices above:
1. Flexible Terms and Conditions
When comparing lenders in search of the perfect startup loan, you’ll come to find that there are a variety of options.
With flexible terms and conditions, it’s easier to find the loan that matches all your requirements. Some of the details to focus on include:
- Interest rate
- Amount of money you can borrow
When you know what you’re looking for, it’s easier to find it.
2. Retain Ownership
At some point, you may decide to seek outside funding for your startup. While it’s good to keep your options open, don’t go down this path until you first compare it to securing a startup loan.
With outside funding, you’ll give away equity in your business to investors. Sure, you get a lot in return – such as professional guidance – but it may not be worth it if you have to give up too much of your business.
With a startup loan, you’re borrowing money from a traditional lender. Once the funds are paid back, you have no additional obligations. Not to mention the fact that you still own 100 percent of the company.
3. Build Business Credit
When applying for a startup loan, good or excellent personal credit will work in your favor. This shows lenders that you’re a responsible borrower in your personal life, thus giving them confidence that you’ll repay the loan.
Building business credit as soon as possible is a good idea, as it can help you secure additional funding down the road.
Tip: repay your startup loan based on the terms and conditions of the agreement. Making payments in full and on time will help you build business credit.
Even though you may have some initial reservations about applying for a startup loan, learning more about your options will put your mind at ease.
When you combine your knowledge with an excellent personal credit score, you’re in position to compare startup loans and lenders. This should lead you to the loan that puts you in position for future success.
Do you have any experience with startup loans? Were you satisfied with the end result? Would you do anything differently the next time around?