Financing Options for New Businesses: Easy Access for Startup Funding

Starting a new business is always exciting and can be full of potential, but finding the money to get us started and make it happen can be hard sometimes. One of your first thoughts, how do I get the money to make the idea in reality?  In today’s financial environment securing funding is a challenge, especially for new businesses. But with the right knowledge about available options and the right plan, you can find the funding you need. In this blog, we will be discussing funding options for new businesses, the focus will be on the options that don't require giving up equity, offering collateral, or signing a personal guarantee. 

What Funding is Available for New Businesses?

Getting funding for a new business in today's economy it's really tough. Banks and traditional lenders have raised their standards, making it difficult for startups to get approved for loans. However, there are still available funding options to consider with pros and cons:

SBA Loans: The U.S. Small Business Administration (SBA) provides loans with attractive terms for startups, including lower down payments and extended repayment periods. While these loans are easier to get than standard bank loans, they still require a solid business plan, a good credit score, and sometimes some collateral.

Credit Card Stacking: By using multiple credit cards, businesses can quickly access a significant amount of capital. Many times, there are options for credit cards with 0% interest for 12-21 months, which can really help you jumpstart your business. Additionally, this can be a useful short-term option for those without collateral.

Funding Without Equity 

If you’re looking to maintain full ownership of your business, securing funding without giving up equity is key. Fortunately, there are several ways to secure funding without giving away a stake in your company:

Cash-Out Equipment Loans 

If your business owns equipment you can use it as collateral o secure cash loans with better terms, without the need to give up equity. These loans  have monthly payments and terms are 24-36 months which makes it easier for the business owners to manage the cash flow and need working capital for other purposes.

SBA Loans:
As mentioned earlier, SBA loans are a great option for getting funding without giving up equity. They offer the benefits of traditional bank loans, like reliable funding and larger amounts, but with terms that are more flexible for startups.

Real Estate Collateral Loans

You can secure a loan by using your business assets, like real estate, as collateral. This allows you to get the funding you need without giving up any ownership in your business.

However, it's important to understand that if you can’t repay the loan, you might lose the property you used as collateral.

Business Lines of Credit:

A business line of credit gives you the flexibility to borrow up to a set limit when you need it and You only pay interest for what you use, and if you manage it well, you can take advantage of the working capital inflow and keep full ownership of your business, these options are available to good credit clients.

Funding Without Collateral:

If your business doesn’t have assets to use as collateral, especially when starting out, don’t worry.

There are still many funding options that can help you get funding that doesn’t require any collateral.

Unsecured Business Loans:
These loans don’t require any collateral, making them a good choice for startups that don’t have many assets. However, they usually come with higher interest rates and it’s harder to get approved compared to the other loans mentioned earlier, the good thing is that you can get approved in 24-36 hours for these loans.

Credit Card Stacking: 

This strategy uses multiple business credit cards to get the money you need. There are options for credit cards with 0% interest for 12-21 months, which can really help you jumpstart your business. If 0% options are not available they will come with higher interest rates for startups. 

Personal Loans:

Using a personal loan can give you the funds needed to start your business. Just be aware that this approach can mix your personal and business finances, which might cause issues down the road, but most of the time business owners are able to jumpstart their business with these loans.

Revenue-Based Financing:

This funding option lets you borrow money based on your future revenue. It’s a good choice for companies with steady cash flow but no assets for collateral. The loan is repaid by sharing a portion of your future revenue with the lender until it’s fully paid, sometimes these could be expensive.

Funding Without a Product:

If your startup is in the early stages and doesn’t have a product yet, getting funding can be difficult.

But there are still some options you can explore:

Personal Loans and Credit Card Stacking: As mentioned, personal loans and credit card stacking can give you quick access to funds even without a product.

They come with higher risks and interest rates, but they can be crucial during the early stages of product development.

Pre-Sales and Crowdfunding:

If you have a solid business idea and clear benefits, you can raise money through pre-sales or crowdfunding. 

These methods allow you to raise money by offering your product or service before it's fully developed, using early customer demand to fund your business.

Business Funding Without a Personal Guarantee

Many entrepreneurs worry about risking personal assets to get business funding. Fortunately, as your business grows, you can find ways to secure funding without needing a personal guarantee.

Corporate Credit Cards: 

As your business becomes more stable, you could be eligible for corporate credit cards that don’t require a personal guarantee. These cards are based on your business credit, which helps protect your personal finances.

Business Loans for Established Companies:

Large and established companies with strong assets and a good credit history may qualify for loans that don’t require a personal guarantee.  This option works best when your business can show it can repay the loan on its own, which is more common in later growth stages.

Conclusion
Getting the right funding for your new business could be key to reaching your goals. Even if the economy and other factors can make it tough, there are many funding options out there, whether you need funding without giving up equity, collateral, a product, or a personal guarantee. By understanding your business's needs and exploring these options, you can find the best funding solution to help you grow.

At US Business Funding, we understand the difficulties of getting financing for new businesses. Our team is here to guide you through the process, helping you find the right funding solutions that support your growth without risking your ownership or personal finances. Contact us today to learn how we can assist you in reaching your business goals.