You can apply at banks and credit unions for new business loans or startup loans. But there are other lenders you should consider as well. And even though there are lots of lenders out there, all too often entrepreneurs don't know where to turn to get the money they need in order to live out their dreams.
There are lenders who aim to lend to nonprofits, women and minorities. These private lenders may be more likely to lend to these groups than a traditional lender, particularly if it is for a startup loan or a loan for a new business.
No matter what group you fit into, whether it's minority or not, you'll have a better chance of getting the loan you want if you have an original business proposal. This proposal must describe to the lender what the business is, how it will succeed, and how it will provide enough profit to repay the loan. New business loans are more difficult to obtain for startups than for a franchise.
If you are seeking a business loan, as an entrepreneur you should have at least 10 percent of the total amount you'd like to borrow as a down payment. Having less will likely mean you'll be turned down for the loan by a traditional lender. Many banks recommend that business owners take out a home equity loan in order to obtain the down payment.
Once you've gotten the business loan you need, it is up to you to be sure the monthly payments are made, as per your loan agreement. This may mean putting up some collateral, but if you don't have any collateral, then you may want to reconsider. It would be wise to not apply for a loan if you know you may not be able to repay it.
If all of this is daunting, or if you don't have collateral or don't want to risk your property, you may want to consider an unsecured startup loan. These loans don't require collateral, and can often take less time than a traditional loan to acquire. But be sure you shop around, and compare rates and terms.