Business Loans and Credit Lines for Startups

22 Business Loans and
Credit Lines for Startups

Ty Crandall
Chief Executive Officer
(877) 600-2487
info@creditsuite.com
www.creditsuite.com/free-business-loan-consultation

Conventional banks are not a good
place to look for startup loans
• Usually they want 2-3 years of tax returns before they will lend
you any money
• If you’re lucky, you might get a single credit card
• Over 89% of business applications are denied by the big
banks

Conventional Loans
• SBA loans are also tough to qualify for because the lender and
SBA will evaluate all aspects of the business and the business
owner for approval
• To get approved all aspects of the business and business
owners’ personal finances must be near perfect in order to ever
get approved

Try to stay away from
cash flow financing too
• They generally want you in business for at least
a year
• They want to see over $10k in monthly
deposits

Private investors can
be problematic too
• Usually they want 2-3 years of tax
returns before they will lend you any
money
• Venture capital is not an option unless
you have a truly groundbreaking
product or service
• VCs want to see quick returns on
their investment
• They also want a chunk of the
ownership of your business

Unsecured Financing
• Can provide some of the highest loan
amounts for startups
• You can get 0% business credit cards with
stated income
• No financials required
• These report to the business reporting
agencies
• You can build business credit at the
same time
• This will get you access to even more
money without a personal guarantee

• You can usually get a loan of five times
the amount of your highest revolving
credit limit account now
• This is up to $150,000
• This is the highest amount of financing you’ll typically see for a
startup
• It is easily five times what you could get on your own when applying
for cards
• You can get cash out on this program as well
Unsecured Financing

Unsecured Financing
• There is NO impact on your personal credit with this type of
financing
• You need a 700 credit score or a guarantor with good credit to get
an approval
• With good personal credit, you can get unsecured credit cards
with a personal guarantee
• With good business credit, you can get unsecured credit cards
without a personal guarantee

Unsecured Credit Cards
with Good Personal Credit
• Approval amounts from $10,000 to $150,000
• There is no consumer reporting, but there is
some business reporting
• Excellent personal credit with open revolving credit
• Low inquires
• Approval amounts equal to current limits
• 0-25% APR, 0% for 6-18 months, 9% success fee

Unsecured Credit Cards
with Good Business Credit
• Approval amounts from $10,000 to $50,000
• Report to business credit reporting
agencies
• Take 6 months to build credit profile
• Personal credit is not used for pre-qualification
• Approval amounts equal to current limits
• 0-25% APR, 0% for 6-18 months

There are a lot of loans
startups can get
• They are usually not coming from banks
• You can get access to $25,000, $50,000, or
even over $100,000 in initial funding

Startup loans
• Get specialized financing to buy things
you need to get your business started
• Equipment financing and leasing is
available to buy new equipment
• Get loans to put up commercial signs
• You can even get loans to get graphic
wraps for vehicles

Your best bet is
collateral-based loans
• Use your assets as collateral
• Rates are often 5% or less
• Your personal credit rating doesn’t matter

Types of
collateral you can use
• Your 401(k)
• Stocks
• Existing inventory
• Accounts receivable

Or ask a friend or family member
who has these kinds of assets
• They may be interested in letting you leverage their asset in
exchange for a % of your business
• They usually want less of a % of your company than a
VC would
• 401(k) financing is typical

401(k) Financing
• Use existing 401(k) or IRA as collateral for business financing
• This program uses IRS proven strategies
• Pay no tax penalties
• You still earn interest on your 401(k)
• Low rates, often less than 5%
• Close and fund in less than 3 weeks
• Can usually get up to 100% of what’s “rollable” within your
401(k)

401(k) Financing
• Up to 200% financing
• Steps
 A new corporation is formed
 A retirement plan is created which allows for investment into
the corporation
 Funds are rolled over into the new plan
 The new plan purchases stock in corporation and holds it
 Corporation becomes debt free and cash rich

Securities-based financing
• Use existing stocks as leverage to get
business financing
• Borrow as much as 90% of the value of
your stocks
• You continue to earn interest on the
stocks pledged as collateral
• Closing and funding takes less than 3 weeks

Securities-based financing
• 70-90% Loan to value
• Rates are as low as 1.6%
• It is a working capital line
of credit
• Challenged personal credit

Accounts Receivable Financing
• Use outstanding account receivables for financing
• Get as much as 80% of your receivables advanced ongoing in less than
24 hours
• Remainder of the accounts receivable is released once the invoice is paid in
full
• Closing takes 2 weeks or less
• Factor rates as low as 1.33%
• Accounts receivable credit line with rates of less than 1% with no consumer
credit requirement

• Receivables should be with the government or another
business
• If you also have Purchase Orders, you can get financing to
have those filled
• You won’t need to use your cash flow to do so

• Get forwarded up to 80% of receivables
• You have to be in business for one year
• These must be receivables from another
business
• Rates of 1.25-5%

Inventory Financing
• Use existing inventory as collateral for business
financing
• You’ll need inventory valued at $500k +
• You can get approved for a line of credit for 50%
of inventory value
• Rates are usually 5-15% depending on type of
inventory
• Funding within 3 weeks or less

• Minimum inventory loan amount: $150,000
• General loan to value (cost) is 50%
• So inventory value would have to be $300,000 plus
• It can’t be lumped together inventory, like office equipment
Inventory Financing

Equipment Financing
• Get financing to buy or lease new
equipment
• Use your first and last month’s
payments to be approved
• Rates vary widely based on risk
factors
• Can be approved with average credit
of 650 +

• The lender will undervalue equipment by possibly up to 50%
• This is on major equipment only
• Lender won’t combine a lot of small equipment
• Loans up to $2 million
Equipment Financing

Equipment Sale – Leaseback
• If you already own your equipment free and clear you can use
that as collateral for financing
• You are selling the equipment to a lender for cash
• You are then leasing it back from them
• You need at least one larger piece of higher value equipment
to qualify
• Funding is in as little as 3 weeks

Other Collateral
• Investors looking to buy and flip properties who also have
cash, experience, and average credit can get financing
• You can get financing against commercial real estate
• Insurance agents can get book of business financing

Business Credit
• This is credit linked to your
EIN and not your SSN
• This credit is available
without a personal
guarantee
• It is available regardless of personal credit
• You can get business credit immediately, even as a
startup

Start with Vendor Credit
• Work with vendors you use all the time
• Get credit for your regular purchases, like office supplies
and coffee
• These vendors report to the business
reporting agencies within 60 days
• They help you build your business credit
profile and score

Store Credit
• After 60 days you can then get higher-limit, usually $2,500- $10,000
revolving store accounts
• These are at many major stores like Dell, Amazon, Walmart, BP,
Chevron, Best Buy, and many more
• As you continue to apply you’ll get even more credit at more stores
with higher limits
• Use this credit to buy the things you need to fund your business

Fleet Credit
• After you have a total of 10 accounts you can start to get fleet
credit
• This is with higher limits that you can use at a multitude of
sources
• Business credit is the only way to get money for a business if
you don’t have
• Collateral
• Cash flow
• Good personal credit
• or a guarantor

Business Credit Benefits
• Anyone can pull your business credit reports
• You need business credit to qualify for loans
• You can get high limit accounts quickly
• You don’t need a personal guarantee or credit check
• This is one of the fastest ways to get money beyond immediate
funding

Crowdfunding
• It works best when donors can personally
connect with your product or service
• Apart from an IndieGoGo flexible funding
option, all other platforms give you $0 if
you don’t meet your goal
• All crowdfunding platforms take a percentage
• Crowdfunding platforms push you to deliver on your
product or service

• Donors can get ‘donor fatigue’
• A good, well-written and eye-catching pitch is
essential
• Managing a crowdfunding campaign can be a full-
time job
Crowdfunding

• You do best when you line up your
bigger investors beforehand
• Get them to donate on the first or last
days of the campaign
• You will need to provide perks for
donation levels
• Virtual perks like downloads are easier to
manage than physical perks
Crowdfunding

More startup loans
• First Round Capital, for investments in the millions
• Jumpstart Foundry, $15,000
• AngelPad, for web technology entrepreneurs
• Beatspring, for up to $20,000 in startup funding
• Launch, $500,000 per competition
• Check with your alma mater; they
may have something

SBA startup loans
• You usually need to show some time in business for
these
• The most popular SBA loan for working capital is
the 7(a)
• Get approved for up to $750,000
• Rates are usually 2-4% above prime rate
• All owners with more than 20% ownership must
provide a personal guarantee
• Good consumer credit is required
• Low documentation programs are available

• SBA Express is a faster way to secure a SBA loan
• Get a loan amount up to $250,000
• Rates usually range from 2-4% above prime rate
• Also available is Community Express for low and moderate
income entrepreneurs
SBA startup loans

• SBA 504 is the SBA’s second-most popular
loan type
• Often used to purchase land,
equipment, or real estate
• The bank funds the loan, and SBA
generally guarantees up to 40%
• You can usually get a loan up to $1 million
• You must contribute 10% of the equity
typically
SBA startup loans

• 7(m) is their Microloan program
• Loans up to $35,000 for working capital and growth
• Average loan amounts are about $10,000
• Funds come directly from SBA
• This is unlike the 7(a), where funds come from the bank
SBA startup loans

Private Equity Lines of Credit
• Often $250k, $500k, $1 million
• 8% rate
• You need 20% liquid capital
• Can use funds from other funding
• Need mid 600 credit scores
• You must produce your tax returns
for the last couple of years

House Reseller Financing
• You need a 660+ FICO score
• Flipping experience required
• You must have cash on hand to put into escrow
• You can get up to 65% of after-repaired-value
• It is an 8% rate or so, 6 month term

Book of Business Financing
• Commissions from the book of business will serve
as collateral
• You can borrow 2-3 times annual renewal
commissions
• This is a long term loan

Federal Grants
• Like scholarships for school, grants generally do not have to be
paid back
• The federal government wants to give you money!
• For urban projects, try HUD (Housing and Urban Development),
such as:
 Funding Opportunity #: FR-6100-N-06 HUD
Community Compass Technical Assistance
and Capacity Building Program
 Funding Opportunity #: FR-6100-N-21B Fair
Housing Initiatives Program - Fair Housing
Organizations Initiative

• For rural projects, try the USDA (Department of Agriculture),
such as:
• Funding Opportunity #: USDA-NIFA-SBIR-006365 Small
Business Innovation Research Program - Phase I
• Funding Opportunity #: RDBCP-REAP-RES-EEI-2016
Renewable Energy Systems and Energy Efficiency
Improvements Program
• Federal funding means paperwork – fill it out
completely and correctly to be considered at all
• You generally have to show experience in what
you are proposing
Federal Grants

State and Local Grants
• Your local government also provides grants, such
as:
 Grant Watch ID#: 174527 Grants to Miami Beach,
Florida Nonprofits and Businesses for Programs to
Promote Tourism
 The Texas Enterprise Fund
• This is generally less restrictive than federal
grants
• Show you will be helping the community
• See if you can partner with a local business

Startup Financing
• Your startup is your dream
• But it needs money to get going and
to survive
• Get and keep it going with credit
lines and unsecured loans
• We can help

Ty Crandall
877-600-2487
info@creditsuite.com
Business Loans and
Credit Lines for Startups

Business Loans and Credit Lines for Startups

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