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Loans for Starting a New Business - How to Get Funding for Your Business Start -Up

By Edited Jun 25, 2015 0 0

Loans for Starting a New Business – How to Get Funding for Your Business Start -Up
Credit: stockvault.net

Money is the lifeblood of any business, whether old or new. While starting a new business, entrepreneurs discover they need funds, which may not be obtainable from traditional business funding sources, such as personal savings, friends and family, as well as angel investors.

If you’re starting a business and require a loan, you may want to read this article to get help, especially if you’re in the United States of America (USA), United Kingdom (UK), Canada and Australia.

In the United States, the Small Business Administration (SBA) helps entrepreneurs access loans. Even though the SBA doesn't lend funds directly to entrepreneurs, it has a program called the SBA Guaranteed Loan Program, through which entrepreneurs can gain access to start-up loans from banks. The program is a realistic alternative for many start-ups and offers reduced interest rates and longer repayment terms than conventional loans. Like I earlier said, the SBA does not have money to lend but makes it easier for business owners to obtain loans from banks by guaranteeing the loans. The most remarkable SBA program available to small businesses is the 7(A) Loan Guaranty Program.

The loans are for small businesses that are not able to obtain loans on reasonable terms through normal lending channels. Almost all small businesses are eligible to apply for an SBA guaranteed loan. The SBA can guarantee as much as 85 percent on loans up to $150,000 and 75 percent on loans over $150,ooo. In most cases, the maximum guarantee is $1.5 million.  A guaranteed loan may be used for capital to start a new business or expand an existing one. It can also be used for real estate purchases, renovation, construction, or equipment purchases. The best way to learn more about the SBA Guaranteed Loan Program and determine if you are eligible is to meet with a participating lender.

In Canada,you can get a start-up business loan from a bank. In this instance, I’m referring to ‘bank’ as a traditional lending institution (like banks and credit unions). Unlike the past, it’s now easy to obtain a business loan if you have a solid loan presentation because big banks have more than a passing interest in small businesses than before. Of particular mention here is Business Development Bank of Canada (BDC). Its main business is to support. To this effect, it has several programs that directly deal with business start up loans, such as the CoVision program, which provides customized term financing up to $100,000 for new businesses demonstrating long-term viability. Aside the BDC, you can also get business start-up loans from organizations such as the Canadian Youth Business Foundation, Alberta Women Entrepreneurs (AWE) and so many others.

In the United Kingdom (UK),entrepreneurs can also access Government funds to start new businesses. In May, 2012, Prime Minister, David Cameron launched an £82m loan scheme for young people wanting to create a business. Entrepreneurs between the ages of 18 and 24 can apply for funds, expected to normally be about £2,500. While the initiative is geared towards facilitating 30,000 more start-ups and boost economic growth, officials say the loans should be repaid within five years, and interest would be charged at the level of the Retail Prices Index plus 3%. RPI in April stood at 3.5%.

UK banks like Barclays, NatWest, HSBC, Royal Bank of Scotland, Santander, Lloyds TSB also offer start-up funds and help to entrepreneurs but please get a professional to read the fine print before committing to a loan agreement with any of these banks.

In Australia, Government is leading the drive to empower entrepreneurs through various schemes such as the Australian Apprenticeships (which encourages employers to take on apprentices, beginning from $1,250 and going up to around $4,000 in certain cases), commercializing Emerging Technologies (COMET: a grant for technology-focused SMEs) as well as the Fresh Ideas for Work and Family grant (a new grant for small businesses with less than 15 employees). Under this scheme, small businesses can get grants of $5,000 to $15,000 to set up family-friendly working arrangements such as special rooms for kids to come and visit, establishing part-time or job share arrangements, family-friendly rosters, or setting up workplace mentoring programs.

There are also grants for the manufacturing sector, agriculture as well as tourism industries.

From the above, you can see that it’s really not so difficult to get loans to start your new business. All you need is to look at the eligibility requirements for each of the loans mentioned above from their individual websites and make yourself eligible! But don’t stop there; apply for the loan, once you become eligible. It’s as simple as that!



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  3. Bruce R. Barringer The Truth About Starting a Business. New Jersey: FT Press, Dec 23, 2008.
  4. "Start-up loans scheme to help young people launched." BBC News. 28 May, 2012/05/2012 <Web >
  5. "What do banks offer start-up businesses? We look at what each of the main high street banks can do for you." Start Ups Build a Better Business. Thursday, 18 October 2012/10/2012 <Web >

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