This site is now an "Amazon Associate", we earn from qualifying purchases.

3 Reasons Why Your Startup Needs Finance

startup business finance

When you founded your startup you intended it to grow steadily and succeed; but you may not have fully realized that such growth would come with some serious growing pains. There are many challenges on the road to startup success, but none are as terrifying than the thought of running out of cash. Here is everything you need to know to acquire the finance you need to keep your business finances on track.

Why You Can’t Get a Loan From a Bank

Banks require businesses to have an established track record to be considered for a loan facility. Unfortunately, startups have no track record and no collateral to offer the bank for a loan. This risk-adverse position of the banks puts start-ups in a situation where they are unable to obtain institutional finance.

Where to Find Startup Finance

Just because the big banks won’t deal with you does not mean that start-ups cannot locate finance. Some micro lenders serve the small business market, and they are equipped to handle the elevated risk in the deal. The application process is fast and efficient, and you can access cash immediately after your loan is approved.

3 Reasons Why Startups Might Need Cash

  • 1 New Equipment Purchases
    Tech companies require large capital for equipment purchases. Whether a huge purchase like a fleet of in-house servers, or something more economical like buying a credit card reader, electronic equipment costs can add up quickly and trying to pay for it with your cash is next to impossible. Get the finance you need to buy the equipment you want for your company with a small business loan.
  • 2 Support Cash Flow
    How you handle cash flow is critical to a company’s success in the growth phase. As your business grows, so does your bills and you may experience a lag in accounts receivable and your business expenses. You can use a small business loan to cover the shortfall in the interim while you wait for incoming receivables to cover the bills.
  • 3 Future Finance Deals
    If you take a loan from a micro lender, you will be taking the first steps to building your company’s credit profile. As you pay off your loan and stay within the terms of the loan agreement, your credit rating will improve. Once you have an established credit rating, you will be able to apply for larger institutional finance in the future.

A Loan Won’t Solve Financial Distress

Under no circumstances should you acquire a loan if your company is in financial trouble. You should only ever take on debt that you intend to repay. If you use the loan and cannot afford to repay it, then the lender may have legal recourse against your company. If you are struggling financially, speak to your account and lawyer to plan a strategy that will get you back on track.

Work With The Best

As an entrepreneur, you understand the importance of working with the best people if you want to achieve the best results. The same with your choice of micro lender for your small business loan facility. Avoid the pitfalls of high-interest rates from predatory lenders and work with a legitimate, ethical small loan provider.

Visit and arrange a consultation with their professional loan specialists. The team will walk you through everything you need to know about your loan agreement, ensuring that you understand the conditions properly before you sign the final documents.

With more free cash flow available to your business, you remove one of the major pitfalls of failure from your start-up's growth phase, allowing you to focus on building the profitability of the company and achieving your vision.

Peer to Peer Lending and Private Lending Info