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One of the trickiest kinds of loans to get is a business start up loan. 95% of all startup businesses fail within five months, and with personal credit as the only real thing to check, the most popular and stable lenders are not going to be very likely to help you out. However, banks are not the only source. Many successful businesses have gotten their start through some very creative financing methods.
The best place to start is with the lenders with whom you already do business. Your mortgaging bank will probably have a clearer understanding of your creditworthiness than any other bank. If neither this bank nor any other big ones are willing to take on the risk, you may want to hunt down one of the smaller ones that really want your business. The newspaper business section has a number of financing offers from smaller banks and you will probably have a much better chance with them. Credit unions are also a good place to go. Because both of these types of organizations are smaller, you will also have a much better chance of speaking to a representative that is higher ranking in the decision-making process, and may be able to plead your case more successfully than the strict rules and regulations of larger banks would allow. Requirements for these loans will vary as widely as the loans themselves; while personal credit will be a pertinent variable, the kind of documentation, or lack thereof, that you need to provide will be dependent on the type of business itself.
Typically when this fails, the next course of action is to consult the aid of the much-dreaded three “F’s”: friends, family and fools. But in recent times, the route of peer-to-peer lending has become much more sophisticated. Online P2P markets are increasingly popular practices that cuts out the middle man. Banks have to pay for real estate, advertising, and employees where some fellow online simply doesn’t. The best of these markets to search are Prosper.com, lendingclub.com, and virginmoney.com. These services allow lenders not only to get their name out, but also to compete by offering a lower rate. Typically they will offer a standard, 5-year fixed business start up loan, but there are more options and flexibility than with a more conventional business lender.