There are numerous ways for funding or getting a business loan for a startup. Let me share with you a few ways for getting your business loan.

1) Friends and Family - You can usually get loans for good rates from this group of people. Very flexible payback terms too and best in value. BUT loans can create friction among this people and yourself.

2) Home Mortgages(Traditional or Flexible) - This loan's payback term could be the cheapest and with the longest term. However the cost could be 7% - 9% or 8% - 14% on equity loans. BUT your house is at risk in the event of non-payment.

3) Credit Cards - Its' easy to qualify with no collateral for this type of loan. You can get around $3000 to $20,000, and the payback term is around 40 to 60 months. It costs 16% to 23%.

4) Venture Capitalists - This group of people can give you large amount of loans, up to $500,000, and the payback term is from 5 to 7 years. BUT the cost is 25% to 40%, and it is very hard to get, plus this people would want a share ownership.

5) Leasing Companies - The amount that you can loan varies, the payback terms can be from 5 to 7 years, and the cost could be around 12% to 18%.

6) Government Agencies and Programs - The good thing about government loans is that , the payback term is the longest(7 to 20 years), other than the real estate loan. Could get around $50,000 to $500,000. And the cost is around 6% to 9%. BUT getting the loan can be a complex process, with lots of red tape.

7) Finance Companies - It's expensive and collateral to get a loan from these people. The cost is around 14% to 20% and the payback term is from 1 to 3 years. Though you can get from $100,000 to $500,000 ; use this alternative when you don't have many choices.

8) Banks - The reason why I placed these group at the last place is because, generally banks are the hardest to qualify, for getting loans, BUT it's the least expensive. The cost is from 6% to 9% and the payback term is from 1 to 5 years.

What I have placed here are just a few of the many options available for getting a business loan for a startup. Each have their own pros and cons, and as a entrepreneur and a businessman, it is ultimately us, who must analyze our financial situation and decide which option suits us well.

All the best for your business venture.

source - Secrets Revealed by Dave J.

Learn more about this author, Ananth Kumar.
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