A sound business funding strategy can help it grow and scale without obstacles. Whether you are an early-stage startup or an operating one, funding is essential. Startups usually lack sufficient capital to regulate and operate the business infrastructure. Most companies deny loans to companies with low operational history and capital. It does not imply that you cannot achieve your new business goals. With startup business loans, you can aim and rationalise any goal.
What are startup Business loans?
Startup business loans are loans for new businesses. It helps the early-stage business launch products and scale. It is for businesses with a trading history of less than 24 months. These loans are usually unsecured. Businesses can get for purposes like- inventory updates, hiring, buying new equipment, financing the cost of new international projects, etc.
One usually requires a sound business plan, turnover, trading history, founders, and projected earnings to qualify. You can borrow an amount of £25000-£1m for 36 months at a fixed interest rate.
What can you use a business loan for?
An entrepreneur incurs many costs as a part of a start-up business. The loan may help you finance the below expenses easily:
- Insurance and Taxes
- Premises costs
- Staffing and employment
- Stock purchase and delivery
- Manufacturing
- Transportation
- Sales, advertising, marketing
- Website Hosting
- Vehicle costs
- Leveraging any professional services like lawyers or marketing experts
You can identify the purpose and use the funds seamlessly for your needs. You should be clear about the amount you need to meet a goal. Borrowing extra may only increase the additional pressure on the budget. If you are confused, consult the financial expert’s help to borrow the right amount.
Who is eligible for startup business loans?
To be eligible for business startup loans, you must meet a few parameters as a part of the eligibility criteria:
- Your businesses should be UK registered
- You should own a permanent address in the UK
- You should be above 18 years of age
- Should be the registered owner of the business
- Should own a separate business account
- The loan amount should be less than 25% of the business turnover
If you meet the criteria, you can apply for the startup loan as a :
- Limited Liability Partnership
- Self-employed
- Sole trader
- Large firm or corporation
- Charitable organisation
- Social or not for profit enterprise
What documents will you require to qualify?
All lenders may slightly vary in terms and the documents requirement. However, here are some documents that he may ask of you for startup business loans:
- Business plan
- Proof of ID
- Business Address proof
- Accurate Cash Flow forecast
- Bank Statement for the last 2 years
- Profit and loss statements of last 2 years’
How startup business loans may help your business?
However, most businesses want to finance every operational requirement with the available capital. It is sometimes challenging to achieve the same. It can be due to managing emergency business expenses, slow cash flow and limited capital. Thus, startup business loans help your business jump through the obstacles and achieve your business goals. Here is how it helps:
1) Help start any business
Usually, entrepreneurs require funds to register a company or invest in Human resources. Whether you are self-employed or looking forward to expanding your business in the form of a startup, these loans can help. Limited eligibility criteria and no operational history barrier make it one of the best ways to start your business journey.
2) Allows you to retain complete ownership
You can qualify for the amount without risking the ownership of the company. The unsecured nature of these loans makes it possible. The loan approval and the amount it gets depends on the credibility of the business.
3) Grants funds within 24 days
Unlike other loans, one may qualify and get the amount of credit in the account within 24 hours. You just need to provide accurate details, reliable business proof and consistent business history to qualify.
4) Flexibility to borrow extra
If you believe that you would need some more amount, you can borrow extra without applying for another startup loan.
5) High chances of approval with no early payment fees
As only startups apply for these loans, the chances to qualify are high. Lenders consider every application. From early-stage businesses to an entrepreneur seeking funds to start a business. You do not need to worry about any prepayment penalty. If your finances abide and you can pay the loan early, you can do so without trouble.
Things to know before applying for startup loans
Mere rejection of business loans can halt your plans. Identify the requirements before exploring the best startup loan quotes. By knowing the below things, you can improve your business loan approval chances:
a) Do your industry research
Before applying for the loan analyse the competitors, their products, and the techniques they use to promote their business. It will help you create a business plan without any lacking. It may help you ensure a clear vision of what you want to use the funds for.
- Create a visionary business plan
A business plan explains the process you want to use to grow your business. It should be realistic. If your company values do not align with the business plan, the lender rejects the business loan application.
Identify clear objectives, sales strategies, marketing strategies, and financial forecasts. If you are unclear about some sections, you can seek the help of an expert. It will help you strengthen your loan approval chances.
c) Review every single detail
Reviewing a business plan is as important as creating a good one. A mere discrepancy in the same could lead to immediate loan cancellation. Identify whether the short-term goals are realistic and achievable within the decided time frame. If not, re-define goals and make the necessary changes to the document.
d) Ensure a clear cashflow statement
It reveals how your business is performing revenue-wise. Make sure to include every cost and revenue stream. Revise every cost and stream before moving ahead. It grants the opportunity to lenders to identify whether you can manage the loan payments. If yes, you may get the loan immediately. Your cash flow statement should align with a business plan.
e) Reveal exit strategy
No business loan lender may approve the loan if you lack a proper loan exit strategy. It implies you should identify the loan usage and the repayment plan before availing the loans.Start-up business loans, no credit check loans direct lenders
Can you get a business loan without a credit check?
No, you may not get the loan without a credit check. Every responsible lender conducts a credit check before providing loans. But you may qualify for no credit check loans from direct lenders as a part of your initial financial assessment. If you agree and meet the eligibility parameters, lenders may conduct further checks. The credit checks help the lender know a business’s affordability and provide the right amount as a loan.
Bottom line
This is how a business loan for startups helps a new or existing startup business meet requirement. Identify the eligibility criteria and requirements. Prepare before applying for the loan. Identify the business plan, cash forecasts, bank statements and company papers before applying. You may easily qualify with consistent revenue, sound finances and low operational history.
