Startup Business Loans

By: EconomyWatch Content   Date: 1 December 2009

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Startup business loans are available if you are starting a business and need cash flow to finance your business startup process. You need the money to rent or purchase office space for many purposes such as:

  • your business

  • supplies

  • furniture

  • equipment

  • legal and accounting fees

  • wages of employees 

You need funding for different stages of your startup business or project. The funding types are:

Seed Capital: It is the money you need to do the initial planning for your business.

Working Capital: It is the money that helps you pay for equipment, supplies and so on for a short period of time.

Expansion Capital: It is the money that helps your company expand by purchasing bigger and better equipment, or relocating to larger premises.

 

Bridge Capital: It is the money that bridges the gap between your current financing and the next stage of financing.

Startup Business Loans: Sources

The following are sources of startup business loans:

Line of Credit: This is essential to supplement the unexpected expenses that you may have underestimated in preparing a business plan.

 

Startup loan from banks: Now, you can always get a loan from a bank or a credit union if you have a good credit history and have the required documentation. Many banking establishments have various programs that benefit entrepreneurs and are solely dedicated to startup businesses.

Loan from government sponsored organizations: You can explore various government entities to fund your startup venture. For instance, in Canada, if you are aged between 18 and 34 years, the Canadian Youth Business Foundation (CYBF) will provide funds of up to $15,000. The Canada Small Business Financing (CSBF) program provides you with loans up to $500,000 through business loans made directly by a chartered bank or a credit union.

Investor groups: You can visit various angel investors, venture capitalists, or private lending entities to fund your startup business. Be prepared with the right business idea and plan. These investors may or may not ask for a stake in your business as their prime goal is to maximize their return on investment.

Lastly, it is important to approach your family and friends, and borrow funds from them to finance your startup. It is sometimes a good idea, as there are no interest charges.


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