Small businesses are the nucleus of the U.S. economy, making up over 99 percent of employer firms in the United States. Financing is essential for small business survival and growth, as well as for the nation’s fiscal health. Obtaining financing as a startup can be difficult because many new businesses have no established credit history, making the owner appear as a high-risk borrower to traditional banks, regardless of the business revenue. This type of banking strategy only prevents a startup from growing at a healthy, moderate pace.
There are a few options to help startups get the lending they need. Traditional lending sources are often the first thing that comes to mind, especially secured loans. While these can be great tools, not every startup meets the requirements or personal collateral required. Defaulting on a secured loan can not only stop the business in its tracks, but can also financially ruin the people who have risked their property in hopes to grow their business. It’s a viable strategy, but the rewards must always outweigh the risks.
Other options to consider for alternative lending sources are unsecured business loans. If a startup is planning to expand, they’re doing something right and their growth in sales will reflect this. We all want to see startups succeed, which is exactly the reason alternative lenders got started. By presenting a strong business plan and increasing business sales, it is often very easy for these new innovators to find the source of funding they need through unsecured loans.
SnapCap typically requires a minimum of 1 year in business in order to qualify for our funding options.