Where to Find Credit for Start-Ups
Meeting start-up costs is for many people the single biggest challenge when setting up in business. Before selling a product or a service it first has to be available to be sold, which depending upon what it is you are offering may entail a substantial financial commitment. Initial outlay before income, the eternal small business conundrum!
The obvious place to turn is to a bank, and high street lenders will have business advisers on hand to give provide you with the very best of their expertise. However there are two issues to consider – interest rates, and your own creditworthiness. Most business ventures almost by definition involve an amount of risk, and banks may ask to see evidence of your ability to pay them back. Then if you do get a loan, you will need to repay more than you have borrowed which places you in the red before you have even started.
Microloans and Credit Cards
One possible alternative is to obtain what is known as a microloan, from a company like OnDeck or Prosper. Usually these companies apply different lending criteria, whilst some are peer-to-peer lenders.
Many business owners resolve their initial cashflow issues through the simple expedient of acquiring a credit card. There are specific credit cards available for businesses, but even a personal card can be a useful source of easy credit if you don’t mind paying the fairly hefty interest charges which fellow if the balance isn’t paid in full by a specified date.
Before even considering credit though the budding entrepreneur should explore every other avenue first. There are often start-up grants available from a whole variety of sources, from local authorities to charities. The Small Business Association (SBA) also provides capital to new enterprises under some circumstances, at minimal interest.