Starting a new small business is exciting. Becoming your own boss is a very gratifying experience. Many new small business owners are faced with strong financial needs that require a new small business loan. When looking into your financing options with a new small business it is important to have money for a deposit, collateral or a cosigner because your business does not have a credit history yet so lenders are looking for a way to secure their investment in your business.
What is a new small business loan?
A new small business loan is a loan provided by a bank or another type of lending institution to a new small business. The loan does not need to be specifically for any purchase and so on, it is money for the business to start up, buy any equipment and supplies need as well as to provide working capital for the business until they start bringing in enough money. Lenders typically look for money down, collateral or a cosigner with a new small business loan. Lenders offer moderate interest rates that are fixed to new small businesses, as well as flexible repayment schedules.
Common uses for a new small business loan
- Property Purchases
- Equipment purchase
- Inventory purchase
- Supply purchases
- Meet payroll and other financial obligations
- Working capital
Terms and conditions of new small business loans
With new small business loans lender want security, this is why your business needs to put up collateral or a cosigner. If you fail to meet the repayment obligation then your collateral will be seize and sold to cover the loan or your cosigner will be healed responsible for repayment. Interest rates vary with each lender and borrower, however are typically up for negotiation.
How to get a new small business loan
- Find a lender that offers this type of financing
- Make sure your business meets the lenders requirements
- Submit an application
- Negotiate the terms and conditions of the loan if possible
- Sign the contract and set up a repayment schedule
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.