Startup Loans with No Revenue | ABC Biz Loans

Startup Loans with No Revenue | ABC Biz Loans

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Lenders are hesitant to invest in a startup with no revenue.

In fact, most lenders will require some level of proof that your business is generating income before they’ll hand over the cash.

What Exactly Is a Startup?

A startup is generally considered to be a company in its early stages, often characterized by high uncertainty and risk. A startup without revenue has yet to generate any income from its operations. This doesn’t mean it’s not earning any money at all, just that it’s not deriving revenue from its core business.

But don’t worry – there are ways to get around this obstacle and secure the funds you need to grow your business. Here are three tips.

Tip #1: 0% Business Cards

Many credit card companies offer 0% APR introductory rates on new cards. This can be a great way to finance a startup without revenue, especially if you can repay the balance before the promotional rate expires.

APR Defined

The APR on a credit card is the annual percentage rate. This is the cost of borrowing money expressed as an annual percentage. This number includes both the interest charged and any fees associated with the card. For example, if you have a balance of $2000 on your card and the annual percentage rate is 18%, you would owe $360 in interest for the year.

How to Qualify For a 0% Business Credit Card

To qualify for one of these cards, you’ll need good or excellent credit. And remember, even if you don’t carry a balance from month-to-month, interest will still accrue on any purchases made with the card. So make sure to pay off your bill in full every month!

Some of our favorite 0% APR business cards include:

  • The Chase Ink Business Unlimited Card offers 0% intro APR on purchases and balance transfers for 12 months, then a variable rate, currently around 15.24% – 20.24%
  • The American Express SimplyCash Plus Business Credit Card offers 0% intro APR on purchases and balance transfers for 15 months, then a variable rate, currently around 14.99%-20.99%.
  • The Capital One Spark Cash for Business offers a 0% intro APR on purchases and balance transfers for nine months, then a variable rate, currently around 14.74% – 22.74%.

Tip #2: Equipment Financing

Equipment financing loans are a great way to get the money you need to purchase new or used business equipment without having to wait until your business has generated enough revenue.

Hypothetical Equipment Financing Loan

Here’s an example: let’s say you want to buy a new computer for your office, but don’t have the cash on hand right now. You could take out an equipment financing loan and use that money to pay for the computer. As long as you make your monthly payments, the loan will be paid off over time and you’ll be able to enjoy all the benefits of owning that new computer!

Considerations for an Equipment Financing Loan

If you’re thinking about taking out an equipment financing loan, there are a few things you should keep in mind. First, make sure you know how much the loan will cost you in interest. Second, be sure to read the terms and conditions of the loan carefully so you know what’s expected of you. Third, make sure you can afford the monthly payments.

Equipment financing can provide the financial boost startups need in order to acquire necessary tools, machinery or vehicles.

One Company That Used Equipment Financing to Grow Into a $4.54 Billion Business

One example is U-Haul International Inc., an American moving company specializing in self storage units as well as truck rentals which was founded by Leonard Shoen on August 12, 1945 at Stinson Airfield near San Diego, California. Shoen was renting out war surplus B-17 heavy bomber tires mounted on wheels towed behind Jeeps.

He started the business with a down payment and secured an equipment financing loan from General Finance Corporation to purchase six trailers.

U-Haul’s first year of operation proved profitable, despite being launched during tough times immediately following World War II. The company grew steadily throughout the 1950s as America’s post-war population boomed. By 1959, U-Haul had added more than 300 dealerships to its network. Today, U-Haul is one of North America’s most iconic brands and has over 16 million customers annually. At the end of 2020, it was valued at $4.54 billion. And all this was accomplished in part due to early access to necessary equipment through a well-placed equipment financing loan!

Tip #3: Invoice Financing

Another option for businesses who need capital but don’t have the revenue to back it up is invoice financing, a type of loan that allows businesses to borrow money against their outstanding invoices. This can be a great option if you’re waiting on payments from customers, but need the money now.

Factoring & Discounting

There are two types of invoice financing: factoring and discounting. Factoring involves selling your invoices to a third party (called a factor) in exchange for cash. The factor will then collect payment from the customer on behalf of the business. Discounting involves borrowing money against the value of your invoices, which means you’ll get less cash up front but won’t have to worry about collecting payments from customers yourself.

Both factoring and discounting can be a great option if you need money fast, but it’s important to shop around and compare rates before you decide which one is right for you. You also want to make sure the company you’re working with is reputable and has a good track record.

Tip #4: An ABC Unsecured Business Loan

Another option you have when applying for loans with little or no established financial history is trying your luck as an “unsecured” borrower.”

Unsecured business loans are based on the creditworthiness of your company, rather than any collateral you may offer (such as equipment). They’re also available at lower interest rates and longer repayment terms than secured loans.

We at ABC specialize in unsecured business loans, especially for startups with no revenue. We have been in this market for decades and have worked with businesses both large and small. Your startup is an opportunity, not spoiled milk.