Commercial bank loans don’t require entrepreneurs to turn over equity or company control. In general, banks prefer to make loans of more than $15,000. Banks will likely require:
- Good Credit
- A solid business plan
- Ability to repay the loan
Line of Credit is an arrangement in which a bank extends a specified amount of credit to a specified borrower for a specified time period. A line of credit is best suited to help cover expenses that tend to fluctuate throughout the course of a year.
Public Private Loan Programs – Washington state is unique in the nation with only a handful of lending platforms for small businesses. Check the FlexFund for more information about this innovative lending platform.
Microloan Loan Programs – Nonprofit lenders offer microloans to small businesses and are often character based loans as opposed to loans based solely on good credit. Some nonprofit partners offer microloans through USDA or other partners. Like these microlenders, Community Development Financial Institutions (CDFIs) in WA are often first stage lenders for start-ups, those with a challenging credit history, beginning entrepreneurs with no credit history or those who have been denied credit from traditional lending institutions. Microlenders on the Evergreen BizLink Platform will of loans from different sources (SBA, USDA, etc.) tailored to your business needs generally up to $50,000.
Home equity loans are a cost-effective alternative to other types of loans because they often offer good interest rates available. But you may not want to risk your family home to launch your business venture without a solid track record of sales.
Equipment lease financing gives you access to many types of equipment – computers, copiers, fax machines, cars and trucks – without tying up your cash or credit lines. Although it doesn’t bring in cash, leasing reduces the amount of cash you otherwise have to raise to start.
Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive – credit card interest rates typically run much more than you would likely pay on a bank loan.
Factoring allows a company to “sell” its accounts receivables to an outside company at a discounted rate. This allows the company to receive funds immediately to fund operations and ease cash flow. Factoring is done by private companies.
Community Advantage Loans These loans are for businesses in need of affordable capital. With a mission of serving underserved markets
Rural Microenterprise Assistance Program These are microloans through the USDA for businesses in rural communities.
The SBA provides a summary of their loan products.