One of the biggest challenges a new small business must face is obtaining the money it needs to launch and grow. New employer small businesses are the primary source of U.S. job growth but are much more likely than larger firms to face financial challenges accessing borrowed capital. In order to proudly turn on your physical or metaphorical “open for business” sign, you may need to get startup small business financing.

Here we’ll explore what types of loans may be available to your new business and how to qualify.

What is a Startup Business Loan?

A business startup loan is financing meant to help with the startup costs of a new business. Startup small business loans can go towards things like working capital; the purchase of equipment, machinery, supplies, inventory, and furniture; and the purchase of construction equipment or real estate.

How Can a Startup Loan Help Your Small Business Grow?

Beyond getting you the funding you need to start your business, a startup loan can also help you expand your business. If you’re looking to grow your startup business, a loan can help you pay for things like:

• Business equipment for new employees, like laptops or cell phones
• Larger office space
• Office utilities, including wifi, electricity, etc.
• New office furniture
• More machinery to expand operations
• More inventory to expand your sales

Basically, anything that may require more funding to expand your business could be covered by a startup business loan, if your business qualifies.

Compare your financing options with confidence

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What to Look For in a Startup Business Loan

In order to decide the best loan for your business, you’ll need to consider a number of the loan’s features, like:

• How much money does it give you?
• When will the money fund (hit your bank account)?
• How long do you get to repay the loan?
• What is the repayment schedule?
• What is the interest rate?
• How much do fees cost?
• What are the requirements with regard to collateral?
• Is a personal guarantee required?

Watch out for advertisements for “guaranteed approval” loans that require an upfront fee. It could be a loan scam.

The Best Financing Options for Startups

If you’ve already started your hunt for a loan, you’re well aware that there is a seemingly infinite amount of small business lines of credit and loans out there, available from banks and online lenders. New businesses are considered high risk, so their options will be more limited.

Here are options to consider:

1. Business Credit Cards

This is one of the top choices for new businesses. Why? Because most small business issuers don’t care how long you’ve been in business, As long as you meet their minimum requirements— typically that means good or excellent personal credit scores and sufficient income from all sources, not just the business— you may qualify.

And while you may think of a credit card as a convenient way to pay for purchases, at the core, credit cards offer access to a type of financing: a line of credit. In the Federal Reserve Small Business Credit survey, 53% of small businesses reported using credit cards to help fund their operations.

That means business credit cards can be a viable alternative to startup business loans.

They can also help you get off on the right foot by separating business and personal finances and establishing business credit.