How to get a business start-up loan with no money is what entrepreneurs want to know .
Getting a loan as a start-up comes with many hurdles; loan houses want to see a positive balance sheet, good income statement, etc before giving out a loan.
Considering these challenges, small-scale start-ups with no option to sell their ideas or renege on bringing them to reality.
Fortunately, there are other less cumbersome ways to get a start-up loan for your business with no money. The next section covers everything you need to know about getting such loans.
How Does a Start-up Business Get Funding Without Loan?
Start-ups can access any of the options listed below when seeking funds for the business, they include:
- Angel Investors
- Personal savings
- Business loan
- Friends and Family
- Crowdfunding.
Angel Investors
Angel investors are individuals with large capital looking to finance capital-intensive start-ups for a share in the company.
Start-ups requiring huge capital outlay seek funds from these investors while forfeiting a huge chunk of their revenue to kick-start and own the business in the long run.
The high risk involved makes many angel investors careful of plunging their resources into any project that has no prospect. Most angel investors have a 60-70% stake in the start-up.
Personal Savings
One of the oldest ways start-ups get funds for their business. The source of funds includes their returns from investment, a part of their monthly salary saved, or asset sales.
However, one drawback of this type of funding is the low start-up capital as their savings do not match up the amount needed to run the business.
Unless the initial cost to run this startup is minimal, start-ups requiring huge loans and funding will find it difficult to set up.
Business Loans
Another way to seek funds as a start-up is by applying for a business loan from your bank. Banks give out loans to loyal customers.
To apply for this loan, you provide your bank with collateral and proof of credit score as the loan to be given is a secured one.
Moreso, your bank gives you this loan if you have been doing business with them as well as having a stipulated amount in your account with them.
Friends and Family
Trusted friends and family members can also contribute to your start-up by way of a grant or low-interest loan.
When you approach them with your business idea and the requirement to start up, they either give you a part or the whole amount needed to start the business.
Many multi-billion companies had their start-up loans from friends and family, one quick one that comes to mind is the Dangote group in Nigeria.
Crowd-Funding
This innovative approach to sourcing funds has been with us since business activities started but only gained popularity recently.
The way it works is individuals or companies wanting to finance their business project call out to the public to invest in their offer by freebies and stakes which upon launching can be converted to cash.
Cryptocurrencies start-ups tend to give out airdrops and other ICO which can be exchanged later for cash when the company starts making a profit.
Read Also: 3 Business start-ups worth considering in 2023
What is the easiest loans to get approved for?
While the options above are ways start-ups to get funding, not all loans are usually approved for.
This is due to the nature of the loan most start-ups apply for and their credit rating along with other factors.
The list below highlights the easiest loans to get approved for as an individual looking to fund their start-up:
Pay-day Loans
The reason payday loans are among the easiest loans to get approved for is the fact that repayments are deducted from your monthly remuneration.
More so, aside from the fact that they are paid upon receiving your salary, the loan on its right is a short-term loan, hence why it is one of the easiest to pull off.
Unfortunately, this loan bears a high-interest rate and can land you in a circle of debt if not properly managed.
Pawn-Shop Loan
Unlike payday loans, another secured loan you can optimize to get approved for is the pawn-shop loan.
The loan takes any of your electronic gadgets, antiques, etc. as collateral before disbursing cash to you. In the event of a default, the kept item is confiscated.
Although the type of loan is one of the easiest to get approved for, the amount loaned out is meager compared to a payday loan.
Personal Installment Loans
From your bank, you can get a personal installment loan, which is deducted at an agreeable time with your bank.
A personal installment loans can be secured or unsecured, nonetheless, this loan spreads payment within months to enable prompt payment.
This loan offers a high amount with an even spread in payment and interest rate.
Car Title Loan.
Unless you have an alternative means of commuting, the car title loan is among the easiest loans to get approved for.
The lender gives you the loan while taking possession of your car as collateral. This loan is a short-term loan.
Being a short-term loan, a default in repaying the loan could have extra charge or forfeiture of the collateral.
How can I get a loan in 5 minutes?
Getting a loan in 5 minutes sounds incredible yet is true. Considering the legalities to get a loan, knowing you can get one on time is a relief.
From Online lenders, to your credit account, friends, and family, the list is endless, while the loans are necessarily not executed in 5 minutes, they ensure prompt disbursement.
Personal CreditCard
Your credit card can give a quick loan so long your credit rating and the score is positive. All you need to do is to request one in case you don’t have any.
Most credit cards allow access loans of up to $500 with a little interest rate, more so, you beat the hassle of legalities.
Online lenders
Many online lenders give unsecured loans at low-interest rates within minutes, this makes most borrowers source loans from them.
However, some online lenders will only give high amounts of loans to members who are subscribed to their plan.
Friends and Family
Friends and family still remain the individual preference for short-term loans, thanks to the low cost and no fees in getting the loan.
Additionally, these loans are also quick to source and bear no legality as with traditional credit companies.
Which App lets you borrow money?
Money borrowing apps allow you to access loans without having to leave the comfort of your house to the bank.
However, they may require certain documents like your residential address, utility bills, and bank statement, one thing for sure is they let you access loans.
The list below is an app that let you borrow money with the criteria to pass to ensure a hitch-free loan:
Albert
The Albert app gives users and applicants loans of up to $250.
The online loan app offers a slight fee for an instant and free deposit in 2-3 days.
One drawback to this app is that to access the high loan, a membership fee is required.
Brigit
Brigit app gives as low as $50 and loans as high as $250 with no late fees and penalties charged.
They also have an instant fund disbursement.
Chime.
Like the rest, chime offers loans of up to $500, with a non-applicable fee. Sadly, their loan is strictly for her members.
Also, their loan is only accessible from their point of sale service.
Other online loan apps like Dave gives up to $500 without the need for a credit check and with a low cash advance fee,
What Loan can I get with very poor credit?
Poor credit affects your application for a loan when mismanaged, regardless they are some loans you can have with very poor credit.
These loans hedge your payment on your personal properties, bank balance, etc. the loans are:
Personal loans
Full details of this loan type are given here
Home Equity loans
Here your home is put out as collateral with the equivalent amount given as a loan.
This loan ignores your credit score as your building covers the loan.
Others include Bank agreements, cash advance,s etc. They don’t factor in your credit score before disbursing the loan.
Conclusion
Don’t be stranded looking for a start-up loan, numerous ways to source funding abound: from angel investors to friends and family, online apps that give loans the list is endless.
The information in this article is enough to get you started, take your time to digest it and find what works best.
How to Get a Business Start-up Loan: Related Articles
- How To Find Angel Investors For Your Small Business
- BEST STARTUP BUSINESS LOANS IN 2023
- ANGEL INVESTORS: Meaning and All You Should Know
- SMALL BUSINESS INVESTORS: How To Find One
- Angel Investment Network: 2023 Company Reviews
How to Get a Business Start-up Loan with No Money: References
