Startups are a fascinating segment of the entrepreneurial and business world. New businesses are created every day, and all across the world, small businesses run by people with great ideas are cropping up in order to meet the daily needs of consumers with better solutions and more consumer-friendly prices than the corporate competition. Small businesses and startups are created to fill a void in the marketplace, and as a result, they offer some of the most exciting developments and breakthroughs in the business world and across industrial sectors.
If you’re working on launching a new startup, you are likely the owner of a fantastic new idea that may just change the world around you. But launching a business takes more than great ideas and a methodology for bringing solutions to consumers. New businesses need funding, and for many entrepreneurs, this can mean hundreds of thousands of dollars (if not much more) that simply don’t exist in a usable savings or investment account. Individuals fund into this funnel as they start to get serious about their businesses and entrepreneurial aspirations, but with start up business loans, finding the funding you require doesn’t have to be an impossible task.
Investments made into your company in its infancy are often broken down into two categories. A traditional loan from or through the Small Business Administration (an SBA loan), or some other lender, will look and feel much like a personal loan, car loan, or mortgage loan. A small business that takes out a startup business loan will be required to pay back monthly payments to the lender just like any other borrower. This is a great option for those looking to maintain maximum equity in their venture, but it sacrifices mobility in the short term because profits have to be made early on in the life cycle of your new business in order to service the debt (or payments will come out of your personal accounts instead).
Alternatively, many businesses in the startup space will look for investors who will offer capital in exchange for an equity share in the company. These funding options typically won’t require repayment in the form of monthly checks made out to a lender, but they may come with a steep price tag over the long term. As your business takes flight, your personal earnings potential as the founder or founding member is hindered by the addition of other stakeholders who will take their cut of the profits as well.
Many financial institutions offer business loans with great interest rates and repayment terms. As well, alongside a traditional loan, many business owners find that they can open a credit card account for their brand and take advantage of a line of credit and perhaps even cash-back bonuses and other incentives that many consumer credit cards offer to their users.
Business loans offer new businesses the funding they need without having to sacrifice the essential equity value of the brand in its early days. This is important because your company won’t be worth as much today (in terms of financial valuation) as it will be in the future if you begin to produce the successes that you are hoping to achieve. It can be hard to think in terms of “shares” early on, but if you break the company’s equity into this representational notation, a 10-percent sliver might be worth $10,000 today, for example, as just an idea. Yet, once you begin fabricating and selling products, your earnings potential skyrockets, making your brand worth a combination of real sales and intellectual property. Giving away equity while still working on the sales pipeline can dramatically change a business owner’s financial future, and in a decidedly negative fashion.
Consider a business loan for your new startup today.