Ideally, when that light bulb flashes above your head and you have the entrepreneurial idea of a lifetime, you'll have a tidy nest egg to gradually get your operation off the ground.
Once established, you can work on meeting eligibility requirements for a loan so you can take your business to the next level when you're good and ready.
But what if your business is ready for expansion while falling short of lenders' financial expectations?
Lenders typically want promising figures regarding revenue, business age, and credit scores, before even considering approving a loan, so if your numbers aren't looking so good, you'll find it tricky to secure the funding you need.
Don't give up hope just yet, though, as there are ways to get your hands on some funds to stimulate growth before your business reaches the profitability zone, and I'm going to be telling you all about them today!
Business credit cards are a criminally underrated form of borrowing.
Although personal credit cards are often quite harmful tools, allowing people to get into more debt than they can afford to repay, business credit cards offer favorable interest rates and provide money immediately when you need it.
What's more, when used responsibly, they can boost your credit score so when you're finally ready to apply for a traditional business loan, you're more likely to get a lender to sign on the dotted line.
Getting one might still be a bit of a challenge, as issuers do take cash flow into account when approving applications, but they view a solid personal credit score as a far more reliable measure of your creditworthiness.
So, how solid are we talking here? Well, 690 is widely considered the baseline for successful applicants.
One of these handy cards will be particularly helpful if you're trying to get a startup into the profitability zone but, as yet, has generated very little revenue.
Equipment financing is a pretty clever loan format.
Essentially, the stuff you're going to buy with the agreed-upon sum will act as the collateral of the agreement, meaning you don't need stacked assets or an absolute deluge of a revenue stream to qualify.
That said, lenders of equipment loans will take your personal credit score, as well as your TiB (time in business) and how the equipment fits into your business strategy, into account when assessing your application.
The drawback here is that you can only use these loans for very specific, tangible assets, so if you're looking for money to funnel more generally into the many facets of your business, you won't get all the support you need from equipment financing.
Unless you're lucky enough to have some very generous investors on your side, your startup probably isn't going to generate any significant revenue for some time.
But if your research and business plans show that your operation has some serious money-making potential in the future, it's worth trying to secure a loan so you can reach that profitable stage faster.
Finding a willing lender still might be quite challenging, but if you're passionate about your venture and the projections look promising, you're far more likely to find someone excited to do business with you.
Your Business Has Depleted Your Personal Accounts
Are There Any Alternatives To Business Loans?
Zero-debt financing — Utilizing equity can help you source debtless loans, as can a more modern approach such as crowdfunding, the perfect tactic for pre-revenue startups.
