Four Places to Secure a Business Startup Loan

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When starting a new business startup, what is more important than passion, a great business plan, a strong work ethic, and a lot hype? Money! You can’t start a business without money and for many businesses, you’ll need more money than you have right now.

How much will it take? First, put together a business plan that includes an operating budget for your first year. You will likely have to talk to others in your industry to find accurate figures and after that, you might add a premium to it to cover the unknowns.

Next, how much money do you need to pay yourself to support your family? Many new entrepreneurs don’t pay themselves anything but that may not be practical if you have a family to support. Once you know the monthly operating expenses for your business plus the amount you need in monthly income, plan on 6 months to a year (closer to a year) of expenses covered before quitting your job and opening your business.

That’s not easy to do and counting on large banks to help you with these funds may not be practical. A recent survey found that loans from the larger banks fell to 10.9% in March of 2012. That’s down from 11.7% in February marking a substantial drop in lending to small businesses. Where else can you go for some of this funding?

Community Banks- Community banks are those local banks that you don’t see anywhere else. Think of a community bank as a local restaurant that isn’t franchised. Community banks often have an interest in loaning to local businesses.

Credit Union- Credit unions are member owned financial institutions that operate similarly to a bank. Credit unions are also community based and often have better rates because they are nonprofit entities.

Crowdfunding- The law was only recently passed making crowdfunding legal, but this will likely soon be a more widespread option for entrepreneurs. Crowdfunding brings together multiple investors who contribute a smaller amount.

Venture Capital- Although venture capital can help you to secure a large amount of funds, VCs, along with angel investors, often won’t invest in to a startup unless they are further along in their growth stage but if you know somebody who is involved in this type of lending, it may be worth a try.


Big banks are lending but the newly passed JOBS Act is designed to make funding easier to find for small businesses. Don’t forget to register your business with your state. You can secure any funding unless your business is an LLC or other business entity.