How to Get a Business Loan With no Money: Starting up a business can be quite challenging in the early stages, most times some businesses require high capital to be executed which oftentimes is a challenge in the way of the entrepreneur due to the low amount of money that the entrepreneur has at their disposal.
Getting a business loan on the other hand is another big challenge to an entrepreneur who has the business idea, the zeal, and the vision to start up a business; it most times make some people give up on the way after trying to get a business loan to fund their business and it proves abortive.
Before trying to get a business loan, there are certain things and factors an entrepreneur must put into consideration in other to avoid making silly mistakes that might eventually put the business on the hook.
Know the number of funds you need
Before going to apply for a business loan, I would advise you to sit down and plan, map out strategies, find out the exact amount of money the business requires, possibly talk to other business owners who probably might be in the same field that you are in so that they can share their experiences, challenges they faced and how they went about during their early days so it gives you insights on how to go about it.
Loan term and repayment plan
You also need to know the period of time the loan lasted if it is convenient for you to pay back as at when due and also a possible means of repaying the loan when the loan duration has come to an end. It wouldn’t be too good to have accrued interest on a business loan as it might pose a threat to your business.
The loan lender background
This is also an important aspect when planning on getting a loan, whether you are getting your loan from a bank, microfinance houses, private loan lending organizations, or individuals – businesses. It is advisable to do a little background check on wherever you want to get your loan from; check their ratings, dealings with other people, be well informed about their loan fees, interest rate and others, also try to know their source of funding as most of them get their funds through money laundering.
Before going for a business loan, it is advisable to know the collateral requirements of the lender or organization; most lenders or financial organizations don’t give out loans if you don’t have collateral that can back up the loan and possibly the interest; So, having this in mind is essential.
Most lenders and organizations make it easy for people to pay back their loans, they give them options of either paying monthly, quarterly, bi-annually, or annually. So, it’s advisable to speak to them very well and tell them how convenient it would be for you to pay up the loan.
So, after considering these steps and you still need a business loan; these are the few steps you can go about in getting a business loan.
How to Get a Business Loan With no Money -Easy Ways to Get Free Loan
Government grants for entrepreneurs
A government grant is actually one of the best ways of getting business loans, most times you don’t pay back as long as the money was channeled towards your business, and most times you get to pay a little just to prove your commitment; most government grants are interest-free and there is no repayment time, repayment process or collateral to be brought. I would say a grant from the government has to be one of the simplest, easiest, and most flexible ways of getting a loan to finance your business.
investment from other business owners
This is another form of getting a business loan to finance your business, meeting with other business owners and organizations has proven to be the pathway for most people. They meet with them and pitch their business ideas to them after which some business owners see potential and decide to partner by investing and funding the business until it can finally stand on its own.
READ ALSO: How to Finance a Start-up Business
Friends and family
Friends and family most times play a vital role in the life of an entrepreneur by helping with funds to go on with their business. Getting a business loan from friends and family is most times interest-free, no collateral needed some don’t even give repayment time or process. It is also one of the most comfortable business loans an entrepreneur can get when trying to finance their business.
Business credit cards
A business credit card is similar to a personal credit card, the difference is that a business credit card is only issued to a business account and not a personal bank account. You get to use your business credit card to get loans if you have built up a high business credit score in the past although there is a maximum limit to which you can have an outstanding on your business credit card. You are also expected to pay something on a monthly basis else the interest rate would accrue until you have repaid.
Equipment financing in other words is a kind of loan that is used in getting equipment’s or tools (Machines) needed for the business. Equipment financing loan like the name implies can’t be used for any other part of the business as it is only centered on getting equipment for the business which may in some cases be used as collateral if the entrepreneur can’t pay back the loan.
Crowdfunding can also be used to get business loans, it involves a large number of people who might like your business ideas and decide to help you; although crowdfunding is not an assured way of getting money. The good side of crowdfunding is that you only pay a little percent of the amount raised ranging from 2% to 5% depending on the platform you used. While the negative side is that crowdfunding hasn’t proven to be successful and there are some things about crowdfunding that most people don’t like which includes: having to reach your goal before getting the money (in essence, if you don’t reach your goal, you don’t get any amount) and when you don’t reach your goal the money raised is eventually returned to the donors. Most people that use crowdfunding are mostly charity organizations or big organizations running big campaigns. Some crowdfunding sites include kick-starter, Patreon, Crowdfunder, and GoFundMe.
So, after reading this article “How to Get a Business Loan With no Money”, I am sure it would guide you in your decision-making when applying for a business loan and the steps you need to take as an upcoming entrepreneur.