How to Get a Start-up Business Loan: Top Tips and Options


Are you finally ready to make the leap? Entrepreneurship is definitely a wild ride. But it’s one of the only journeys you can take that have unlimited upside potential.

When you stay at a job, working for your employer, your salary will always be dictated and limited. Your time off, your schedule, and your work environment will be controlled by others.

But when you start your own business, you get to control your destiny. You actually get to build the life and career you dream of.

Wondering how to get a start-up business loan, so you can start taking action on your dream today? Getting a loan to start a business makes entrepreneurship much more accessible, and helps you achieve your dreams much sooner, rather than later.

Keep reading to learn how to get the start-up business loan you need, so you can finally move forward. 

Add and Categorize Startup Costs

The first step you need to take when pursuing loans for business startups is knowing how much you need, and why.

Depending on the type of business you plan to start, you might need to borrow as little as $5,000 or as much as $500,000. If you need a physical location, you’ll need to factor in your first month’s rent, security deposits, building upgrades, and furniture.

If you need special equipment, create a separate category for that. If you need expensive software, a factor that in. Need a professional website built, or branding done for you? Have a list of marketing expenses.

Basically, you need to research and write down every single thing you need to spend money on in order to get your business from idea to your first sale.

Categorize the expenses. Sometimes, you can get one loan that covers all of your startup costs. Other times, you may be able to find more accessible loans for different expenses.

Equipment financing is usually easy to get since the loans use the equipment as collateral.

Calculate Ongoing Costs

Once you know your startup costs, you’ll need to estimate your ongoing, monthly costs. Since you likely won’t be profitable after one or two months, you’ll need the excess cash to cover your first few months in business.

Ongoing costs include rent and utilities, along with internet and waste disposal. You may need to have your building cleaned by a third-party cleaning service. 

You’ll want to estimate the taxes you’re going to need to pay, which are usually done every quarter for businesses. Then, determine how many employees or contractors you’re going to employ and consider the payroll expenses, which are normally the largest expense. 

Gather the Paperwork

The next step when getting a business loan is to prepare your paperwork and business plan. Lenders are going to want to see a detailed, professional business plan.

Different lenders may have different requirements when it comes to formatting a business plan. But in general, you can expect to spend a few weeks working on this document. It may be worth hiring a consultant to help with this, as it’s very important to your success in securing a business loan. 

With a business plan in hand, you should also register your business locally. This means paying a minor fee and providing your local government agencies with your business name and industry.

You’ll also want to secure any business licenses, tax ID numbers, and other certifications needed to conduct business in your area and industry. 

How to Get a Start-Up Business Loan; Apply

With all of your documents in order, it’s time to take the most important step; apply. And not just with one bank or lender, but with as many as you have time to apply for.

Every lender will have different requirements. Larger corporate banks may have more strict requirements. Make sure to check in with local banks and credit unions.

There are also many lending websites that specialize in providing small business financing. The more you apply, the more likely you are going to get a loan offer that works for you.

Starting Smaller

Didn’t get approved for a business loan? It’s not your fault. The system wasn’t built in your favor.

One way to maximize your chance of getting a loan in the future is by starting small, otherwise known as bootstrapping.

Let’s say you plan to open a coffee shop. Opening and running a coffee shop is more expensive than most people realize, with startup costs pushing $200,000 or more.

If you can’t get a loan yet, it’s likely because you have no business history. Loans are much easier to get with at least two years of business history.

Instead of skipping ahead to a physical location, how about coffee catering? By serving coffee at events, you might only need to spend a few thousand dollars on basic equipment.

Or maybe you open a food truck before opening a full-service restaurant. Whatever you can do to start making money today will help you secure a business loan in the near future. 

Managing CashflowDuring Economic Uncertainty

As business owners quickly found out in 2020, managing cash flow and keeping a business afloat when customers aren’t allowed to patronize your business is incredibly tough.

There were numerous programs available to help small businesses survive during these tough times. Some came in the form of stimulus checks, while other types of loans were available through the small business administration (SBA). 

As you move forward in your business, be sure to study up emergency funding options in the event another pandemic or government shutdown occurs. You can learn more from Your FundingTree. The more options you have stored up, the more likely you’ll succeed when uncertainty strikes. 

Laying Your Business Foundation

Now that you know how to get a start-up business loan, it’s time to put your hand to the plow, get your boots on the ground, and start taking action. 

The sooner you start laying your business foundation, the sooner you’ll be reaping the rewards of entrepreneurship, which go far beyond a healthy income. Looking for more tips like this? Head over to our blog today to keep reading.