What Startup Funding is
Startup Funding is a loan type specifically geared towards helping you finance your business with very little history. Startup Funding comes in many shapes and sizes, ranging from business credit cards, personal loans and lines of credit.
- Loan Amounts: $5,000 – $30,000
- Loan Terms: 0-7 Years
- Interest Rates: 0% (for up to 21 months) to 15%
- Time to Fund: 7 - 10 business days on average
Types Of Startup Loans And Which Ones Are Best For You
For entrepreneurs with less than two years in business and/or less than $150,000 in gross revenues, there are three core funding options available:
Business-Directed Retirement Accounts (BDRA)
A Business-Directed Retirement Account (BDRA) is a deposit account (Not A Loan) in which a fixed sum of money is given and where your retirement annuities can be withdrawn. Specifically, a BDRA allows you to invest your retirement assets directly into your new business without any penalties of taxable distributions.
Business Credit Cards
The application process for business credit cards is similar to that of a standard credit card. Business credit card applications are typically much easier than other business loans. The business credit cards themselves can be used for a wide variety of purchases and are a good way to keep business and personal credit separate. However, with all of the benefits, this means business credit cards often have higher interest rates than other loans. Business credit cards can give upwards of $25,000 – $150,000.
Unsecured Personal Loans and/or Lines of Credit
Personal Loans/Lines are finances borrowed from banks, alternative lenders, or credit unions with fixed terms and rates. Much like any other loan, you pay the money back in monthly intervals at a set interest rate. The majority of personal loans are unsecured– meaning there is no collateral involved. We also have options where the funds are structured as a revolving line of credit as well.
Who Qualifies For Startup Funding: The Three Cs
When you’re looking into loans, Finance Factory looks at the Three Cs: Credit, Cash flow, and Collateral.
You’ll want to have a credit score between 600 and 800- with an ideal score of 700+. But we’ll also look for a minimum account balance of $1,000 – $5,000 for monthly cash flow (but also look at tax returns, profit, and annual revenue).
As for collateral, we prioritize unsecured funding; however, collateral is just one option. As long as you have one of the Three Cs, you’ll qualify for a loan.
It’s important to understand that businesses younger than 2 years or guarantors with poor credit scores will have a harder time qualifying. SBA lenders need to know you’re reliable and not a risk.
- Ideal Annual Revenue: None is required
- Ideal Credit Score: 700 – 800
- Time In Business: None is required
How To Apply / Documents Needed
When it comes to Business Funding, the application process and required documents can vary.
What’s Needed to Apply?
- Credit Report
- Personal Tax Returns
- Personal Credit History
- Personal Financial Statement
Finance Factory Helps You Find The Best SBA Loans For Your Business
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 7 to 90 business days and have a credit score of 680+, let’s chat! With no impact to your credit, our team will be able to provide you with a funding estimate within 48 business hours. Click below to get started!
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