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New entrepreneurs are often in a difficult position in today’s economy when it comes to getting a start up business loan. The vast majority of businesses fail within five months of starting, and banks are much more hesitant to lend money to new businesses than they were several years ago, but there are other places for a new business person to go to for help with starting a business.
First, small banks and credit unions are excellent places to start after the large banks have turned you down. Both are much more competitive and make it much more likely to set you up with a representative that will be flexible and listen to your pitch, rather than turn it down due to the strict regulations and rules of larger banks. While both of these options do not offer the same portability and flexibility of accounts, they can offer more competitive rates and greater flexibility.
However, the most common place for a start up business loan is through person-to-person lending. Online P2P markets are widely used and extremely useful to businesses that have not yet established credit. They will offer a much wider variety of loans and repayment structures without the wastefulness of corporate regulations and middlemen.
There is also the classic, though now somewhat antiquated, use of the â€œthree F’sâ€ for a start up business loan: friends, family and fools. While this may seem like a very unprofessional way of going about starting up a business, this is still a very common practice. Most new businesses come about through very unofficial and colloquial networking between colleagues, and don’t become official as businesses until after much of the networking and organization has already taken place.