An estimated 80% of all new companies close down within the first five years of business, with 50% of them closing down within the first year. Notwithstanding these seemingly dull numbers, around 4.3 million applications were submitted to the Small Business Association (SBA) for start up loans.
Small businesses are defined as businesses wherein operations are limited to only a handful of employees. In more cases than some, the only employee is the business owner. The year 2020 was revolutionary for small businesses and startups with several people finally finding the time to set up shop – out of their own homes.
Social media plays a significant part in the success of small businesses and their marketing. Given how the 21st century is at its social peak, there are several compelling reasons why small businesses should operate and even succeed.
However, the primary factor isn’t intuitiveness or social media marketing, but capital. Any business needs capital and funds to help in growth – equipment, materials, and wages. Even if you’re working for yourself and minimizing costs, you’re not likely to see any gross increases until much later.
What is a Startup Loan?
A business loan or a business startup loan is a credit agreement or a financing plan meant to provide capital for new businesses. As the name implies, a startup loan is used towards purchasing materials, equipment, inventory, and other miscellaneous items to kick start a company.
In a broad sense, a startup loan is any such financial agreement that helps you start your business. While admittedly you’ll be investing some of your own money into the business, there is room for some items that your savings can’t fully provide for.
Types of Loans
1. Equipment Loans
Certain small businesses require machinery to operate. The machinery they need can range from small grade to heavy-duty ones depending on their business. For example, a small business for baked goods would require kitchen supplies.
An equipment loan is a less rigid startup loan wherein the equipment is put down as collateral. You’re paying the bank back their loan and if you default on the loan by missing a payment, they can take back the machinery to cover the cost.
2. SBA Loans
The Small Business Association isn’t responsible for giving loans, rather guaranteeing that a borrower receives a loan. Regardless, there are SBA programs that offer loans of upwards of 5 million.
SBA loans, however, are guaranteed mostly to people who have some sort of experience in the business industry or for those with good credit scores.
Seek Capital provides startup loans either personal or business loans. The business operates throughout the United States and has been known to provide small businesses with startup loans to help them procure enough capital to kick start their companies.
Owning and operating a small business isn’t as easy as it’s made out to be. While several factors contribute to the success of a small business, one of the major factors is procuring enough capital to help the business get off the ground.