GETTING A NEW BUSINESS LOAN IN 2024:
STARTUP BUSINESS FINANCING GUIDE 

GETTING A NEW BUSINESS LOAN IN 2024:
STARTUP BUSINESS FINANCING GUIDE 

NEW BUSINESS LOAN - photo graphics man holding check mark hologram

How to Secure a New Business Loan

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How to Secure a New Business Loan

Home » News » Business » New-Business-Loan

SECURE A NEW BUSINESS LOAN - photo graphics handshake over approved contract

Though Q4 may have already begun, 2023 is far from over yet. There is still plenty of time left to launch a new business..

Hopefully you have already settled upon a business idea. However, if you have not, it is a good time to research upcoming trends in your intended business field.

There are plenty of  business trends forecasted for this upcoming year, including Machine Learning, Cosmetics, Social Media, E-Commerce, Generative AI, Sustainability, Data and soon.

Here is what you can do to help bring a business idea to life or help your
pre-existing business grow before the end of this year

HOW TO GET A LOAN TO START NEW BUSINESS IN 2023?

The end of the year can be an excellent time to invest or sow theseeds for your business come the new year. Financing a new business can beexpensive on your own, which is why it is recommended to seek out investors ora loan.
While investors can be a great source of financing, it can alsocompromise your own vision and creative direction over the brand. With a business loan, you can have more agency in how you run and operate yourbusiness. Though interest rates are high, there are low-interest loan optionsas well as options to refinance the loan down the line.

START NEW BUSINESS - photo graphics using laptop

One of the most affordable options for business financing is throughthe Small Business Administration. The SBA is an independent agency within theU.S. government that offers a range of low-interest loans for all kinds ofbusinesses. However, despite the diverse range of loan options, SBA loans canoften be hard to qualify for.

The good news is that there are other low-interest business loansavailable to help you start your business.

business financing - photo graphics coins phone paperwork

Here is what you need to know to
secure a business loan in 2023.

SECURE A NEW BUSINESS LOAN - photo graphics handshake over approved contract

Though Q4 may have already begun, 2023 is far from over yet. There is still plenty of time left to launch a new business..

Hopefully you have already settled upon a business idea. However, if you have not, it is a good time to research upcoming trends in your intended business field.

There are plenty of  business trends forecasted for this upcoming year, including Machine Learning, Cosmetics, Social Media, E-Commerce, Generative AI, Sustainability, Data and soon.

Here is what you can do to help bring a business idea to life or help your
pre-existing business grow before the end of this year

HOW TO GET A LOAN TO START NEW BUSINESS IN 2023?

HOW TO GET A LOAN TO START NEW BUSINESS IN 2023?

The end of the year can be an excellent time to invest or sow theseeds for your business come the new year. Financing a new business can beexpensive on your own, which is why it is recommended to seek out investors ora loan.
While investors can be a great source of financing, it can alsocompromise your own vision and creative direction over the brand. With a business loan, you can have more agency in how you run and operate yourbusiness. Though interest rates are high, there are low-interest loan optionsas well as options to refinance the loan down the line.

START NEW BUSINESS - photo graphics using laptop

One of the most affordable options for business financing is throughthe Small Business Administration. The SBA is an independent agency within theU.S. government that offers a range of low-interest loans for all kinds ofbusinesses. However, despite the diverse range of loan options, SBA loans canoften be hard to qualify for.

The good news is that there are other low-interest business loansavailable to help you start your business.

business financing - photo graphics coins phone paperwork

Here is what you need to know to
secure a business loan in 2023.

Here is what you need
to know to secure a
business loan in 2023.

NEW BUSINESS COSTS &BUSINESS EXPENSES:
HOW TO CALCULATE YOUR NEW BUSINESS FINANCING GOALS

NEW BUSINESS FINANCING - photo graphics man holding credit card in front of laptop

Depending on your intended business sector, you may need to save up some money before you open up shop. Your startup costs and expenses will be based on the size and nature of your business. However, if you are starting an entirely online social-media business, you can launch with just a few hundred dollars.

But, if you need to purchase inventory, equipment, hire employees, pay for rent and so forth, you are going to need quite a bit more. Some of these business expenses will cost you in the hundreds of thousands.

NEW BUSINESS COSTS &BUSINESS EXPENSES:
HOW TO CALCULATE YOUR NEW BUSINESS FINANCING GOALS

NEW BUSINESS FINANCING - photo graphics man holding credit card in front of laptop

Depending on your intended business sector, you may need to save up some money before you open up shop. Your startup costs and expenses will be based on the size and nature of your business. However, if you are starting an entirely online social-media business, you can launch with just a few hundred dollars.

But, if you need to purchase inventory, equipment, hire employees, pay for rent and so forth, you are going to need quite a bit more. Some of these business expenses will cost you in the hundreds of thousands.

Many home-based franchise businesses can cost anywhere between
$2000-$5000 to start. If you are looking into opening a micro-business,
you may need as little as $1000.

Before you embark on the loan application process, you should outline your business idea and make a comprehensive business plan.

HOW TO GET A FIRST TIME BUSINESS LOAN?

Before you sign any documents or submit any kind of loan application, first research to figure out exactly what kind of loan you need. Securing funding for new business can be a challenge if you have not done the proper research.

Ask yourself: how much money will you need?

Many home-based franchise businesses can cost anywhere between
$2000-$5000 to start. If you are looking into opening a micro-business,
you may need as little as $1000.

Before you embark on the loan application process, you should outline your business idea and make a comprehensive business plan.

HOW TO GET A FIRST TIME BUSINESS LOAN?

Before you sign any documents or submit any kind of loan application, first research to figure out exactly what kind of loan you need. Securing funding for new business can be a challenge if you have not done the proper research.

Ask yourself: how
much money will you
need?

CALCULATE ALL POSSIBLE STARTUP - photo graphics calculator icon

Calculate all possible startup business expenses

These startup costscan consist of expenses like rent, inventory, payroll, equipment, branding, licensing fees, market research, advertising and so forth. If it turns out thatyou only need a few grand to start your business, maybe you don’t need a loanafter all. See if you can secure funding from friends, family, or even, byusing your credit card.

CREDIT CHECK - photo graphics credit card icon

Get a credit check

Before you even begin researching business loan types, be sure to check your credit score. If you’ve never started a business before, you likely will only have a personal credit score. Make sure that your credit score is at least 660. Ideally, you will want a credit score between 700-900. However, it is not the end of the world if your credit score is lower than that.

START GATHERING DOCUMENTATION - photo graphics document icon

Start gathering
documentation

Dependingon your intended industry, you are going to need to start compiling paperwork. This paperwork can consist of proof of identity, credit history, marketindustry research, resumes, business plans, licensing, tax returns, permits, contracts, bank statements and so forth. Be sure to follow the guidelines ofthe loan you are applying for.

Research loan types

In addition to standard business loans, there are also short-term loans, development loans, accounts receivables financing, working capital loans, long term business loans, business purchase loans, lines of credit, lump sum loans and so forth.
Every lender will have a different set of requirements. Be sure to research the lending requirements of institutions like the SBA, traditional banks, online lenders and credit unions. The SBA (Small Business Administration) can be an excellent financing source because they have plenty of loans specifically catered to providing startup business funding. Once you’ve found a loan (and lender) that suits your goals, you can begin preparing for your application.

CALCULATE ALL POSSIBLE STARTUP - photo graphics calculator icon

Calculate all possible startup business expenses

These startup costscan consist of expenses like rent, inventory, payroll, equipment, branding, licensing fees, market research, advertising and so forth. If it turns out thatyou only need a few grand to start your business, maybe you don’t need a loanafter all. See if you can secure funding from friends, family, or even, byusing your credit card.

CREDIT CHECK - photo graphics credit card icon

Get a credit check

Before you even begin researching business loan types, be sure to check your credit score. If you’ve never started a business before, you likely will only have a personal credit score. Make sure that your credit score is at least 660. Ideally, you will want a credit score between 700-900. However, it is not the end of the world if your credit score is lower than that.

START GATHERING DOCUMENTATION - photo graphics document icon

Start gathering
documentation

Dependingon your intended industry, you are going to need to start compiling paperwork. This paperwork can consist of proof of identity, credit history, marketindustry research, resumes, business plans, licensing, tax returns, permits, contracts, bank statements and so forth. Be sure to follow the guidelines ofthe loan you are applying for.

Research loan types

In addition to standard business loans, there are also short-term loans, development loans, accounts receivables financing, working capital loans, long term business loans, business purchase loans, lines of credit, lump sum loans and so forth.
Every lender will have a different set of requirements. Be sure to research the lending requirements of institutions like the SBA, traditional banks, online lenders and credit unions. The SBA (Small Business Administration) can be an excellent financing source because they have plenty of loans specifically catered to providing startup business funding. Once you’ve found a loan (and lender) that suits your goals, you can begin preparing for your application.

Getting a new business loan - photo graphics holding credit card at laptop

NOTE:

Getting a new business loan for a startup business can be much harder than securing a business loan for a pre-existing business. Most lenders will want to see that you already have 2-3 years invested into your business. Lenders will want to see your balance sheets, tax returns and income statements from previous years.

If you are hoping to start a new business but have no previous business experience, you likely will not have any of this documentation.

If you do not have prior experience in opening and running a successful business, you can consider seeking a business partner with the right credentials. Your application will be a lot stronger with an experienced business partner.

NEW BUSINESS LINE OF CREDIT:

One of the best options for opening a business is to seek out a line of credit. Most business lines of credit can give you access to funds up to $500,000 that you can use as needed.

Although, some lines of credit can allow you up to $3 million. With a line of credit, you only pay interest on what you end up using. A line of credit can also be easier to qualify for than a traditional loan.

BUSINESS LINE OF CREDIT - photo graphics using calculator

NOTE:

It is possible to use a personal line of creditt owards your business, however, that may end up being more expensive.

Here is what you’ll need to get approved for a business line ofcredit:

Proof of Identity
● Personal Credit Score
(if you do not have a business credit score)
● Business Credit Score
● Business Plan
● Business Industry Research
● Projected Revenue
● Projected Balance Sheets
● Collateral
● Statement of Purpose
● Working Capital Projection

business line of credit rates - photo graphics loan agreement calculator

Business lines of credit can be issued as secured or unsecured. If youget accepted for a secured business loan, you will likely face lower businessloan interest rates. However, in return, you will have to provide some assetbased collateral. In this case, it may be your business and the assetsassociated with it (equipment, retail space, inventory).

On average, business line of credit rates can vary. They can rangeanywhere from 8% all the way up to 60%. Furthermore, these lenders can alsocharge annual fees, origination fees, maintenance costs and draw fees on top ofthe APR interest rates.

To secure lower interest rates, be sure to work on improving yourcredit history and strive to get your credit score up. Also, it can be moreaffordable to get a secured loan with collateral.

Getting a new business loan - photo graphics holding credit card at laptop

NOTE:

Getting a new business loan for a startup business can be much harder than securing a business loan for a pre-existing business. Most lenders will want to see that you already have 2-3 years invested into your business. Lenders will want to see your balance sheets, tax returns and income statements from previous years.

If you are hoping to start a new business but have no previous business experience, you likely will not have any of this documentation.

If you do not have prior experience in opening and running a successful business, you can consider seeking a business partner with the right credentials. Your application will be a lot stronger with an experienced business partner.

NEW BUSINESS LINE OF CREDIT:

One of the best options for opening a business is to seek out a line of credit. Most business lines of credit can give you access to funds up to $500,000 that you can use as needed.

Although, some lines of credit can allow you up to $3 million. With a line of credit, you only pay interest on what you end up using. A line of credit can also be easier to qualify for than a traditional loan.

BUSINESS LINE OF CREDIT - photo graphics using calculator

NOTE:

It is possible to use a personal line of creditt owards your business, however, that may end up being more expensive.

Here is what you’ll need to get approved for a business line ofcredit:

Proof of Identity
● Personal Credit Score
(if you do not have a business credit score)
● Business Credit Score
● Business Plan
● Business Industry Research
● Projected Revenue
● Projected Balance Sheets
● Collateral
● Statement of Purpose
● Working Capital Projection

business line of credit rates - photo graphics loan agreement calculator

Business lines of credit can be issued as secured or unsecured. If youget accepted for a secured business loan, you will likely face lower businessloan interest rates. However, in return, you will have to provide some assetbased collateral. In this case, it may be your business and the assetsassociated with it (equipment, retail space, inventory).

On average, business line of credit rates can vary. They can rangeanywhere from 8% all the way up to 60%. Furthermore, these lenders can alsocharge annual fees, origination fees, maintenance costs and draw fees on top ofthe APR interest rates.

To secure lower interest rates, be sure to work on improving yourcredit history and strive to get your credit score up. Also, it can be moreaffordable to get a secured loan with collateral.

HOW TO GET START UP LOANS FOR SMALL BUSINESS

Not all loans are created equal! When seeking new small business funding, be sure to research the lender and institution. Because startup business loans are issued to people with little to no business credit history or experience, the requirements and credentials can be quite strict. However, there are still plenty of lending institutions that offer loans with more flexible requirements.

HOW TO GET START UP LOANS FOR SMALL BUSINESS

Not all loans are created equal! When seeking new small business funding, be sure to research the lender and institution. Because startup business loans are issued to people with little to no business credit history or experience, the requirements and credentials can be quite strict. However, there are still plenty of lending institutions that offer loans with more flexible requirements.

What are the best small business
loans for startups?

1. SBA Microloans

SBA Microloans can be a great option for those who do not have sufficient business experience or credit history. The SBA can offer up to$50,000 in startup financing with interest rates ranging from 8-13%. The loan scan sometimes be limited to low-income areas and minorities, so be sure to do some research to see if you qualify.

SBA MICROLOANS - photo graphics typing on keyboard holding credit card

2. Online Business Loans

Unlike traditional banks who may not want to provide funding to an in experienced business owner, online lenders can be more flexible in their requirements. Online lenders can issue up to $500,000, but will want to see that your startup has been in operation for at least 6 months first.

ONLINE BUSINESS LOANS - photo graphics writing on clipboard

3. Asset-Based Financing

Another option for those without established business credit history,is to use pre-existing assets to get liquid cash. Essentially, your businesscan use your equipment/assets as collateral to get the cash flow necessary tostart your business.

ASSET-BASED FINANCING - photo graphics discussing contract

4. Line of Credit or Credit Card

Qualifying for a line of credit can be a challenge. But, you can oftenjust use your personal credit card to help pay for the startup costs for yourbusiness. If more funds are needed, see if you can expand your credit line.

LINE CREDIT OR CREDIT CARD - photo graphics holding phone

5. Family, friends, crowdfunding

Don’t be shy to ask around for some startup cash. Often, your lovedones can be the most reliable funding route you can take to start yourbusiness. However, understand that if you do accept cash from family or friends, be sure to outline terms and interest rates in a contract. Moreover, be sure to define the role ofthe person in your business.

FAMILY, FRIENDS, CROWDFUNDING - photo graphics hand shake at desk

What are the best small business
loans for startups?

1. SBA Microloans

SBA Microloans can be a great option for those who do not have sufficient business experience or credit history. The SBA can offer up to$50,000 in startup financing with interest rates ranging from 8-13%. The loan scan sometimes be limited to low-income areas and minorities, so be sure to do some research to see if you qualify.

SBA MICROLOANS - photo graphics typing on keyboard holding credit card

2. Online Business Loans

Unlike traditional banks who may not want to provide funding to an in experienced business owner, online lenders can be more flexible in their requirements. Online lenders can issue up to $500,000, but will want to see that your startup has been in operation for at least 6 months first.

ONLINE BUSINESS LOANS - photo graphics writing on clipboard

3. Asset-Based Financing

Another option for those without established business credit history,is to use pre-existing assets to get liquid cash. Essentially, your businesscan use your equipment/assets as collateral to get the cash flow necessary tostart your business.

ASSET-BASED FINANCING - photo graphics discussing contract

4. Line of Credit or Credit Card

Qualifying for a line of credit can be a challenge. But, you can oftenjust use your personal credit card to help pay for the startup costs for yourbusiness. If more funds are needed, see if you can expand your credit line.

LINE CREDIT OR CREDIT CARD - photo graphics holding phone

5. Family, friends, crowdfunding

Don’t be shy to ask around for some startup cash. Often, your lovedones can be the most reliable funding route you can take to start yourbusiness. However, understand that if you do accept cash from family or friends, be sure to outline terms and interest rates in a contract. Moreover, be sure to define the role ofthe person in your business.

FAMILY, FRIENDS, CROWDFUNDING - photo graphics hand shake at desk

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