| Startup Business Loans |
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1. Apply for a SBA 7a loan
The SBA 7a is the only program that funds startup businesses with annual revenues under $2 million and without a real estate component. SBA 7a loans come with longer terms than conventional loans. Generally, terms for SBA 7a loans range from 15 to 25 years. Also, within the program small business owners can access other forms of working capital options like a line of credit.
Visit www.sba.gov and search for SBA 7a approved lenders by county. 2. Buy new equipment with someone else’s money
Equipment financing is a cheaper financing alternative and requires less paperwork. Also, you can claim equipment depreciation on your taxes.
Typically, equipment financiers fund up to 50 to 75 percent of the equipment value for start up businesses. The minimum value of equipment is around $25,000. 3. Take a second lien on residential or commercial property
Traditional commercial lenders take second liens on commercial property. In the majority of cases, the first lien is already taken by an existing mortgage lender.
Generally, interest rates are around prime, making it a cheaper financing alternative than a line of credit. Also, unlike a line of equity, second liens do not involve closing costs. In states with low mortgage tax rates, it makes sense to have a second lien. For example, New York has a mortgage tax rate of only 1.8 percent. |