Skip to main content
  • Claims Center
  • Contact Us
  • Español
  • Brokers & Agents
Hiscox Insurance
Menu Toggle
  • Home
  • Small Business Insurance Toggle Menu Toggle Menu
  • Why Hiscox Toggle Menu Toggle Menu
  • Resources Toggle Menu Toggle Menu
  • Policy Management Toggle Menu Toggle Menu
  • Claims Center
  • Contact Us
  • Español
  • Brokers & Agents
  • About
  • Get a Quote Get a Quote
  • About
  • Get a Quote Get a Quote
  • Blog Home
    Start Your Business
    Grow Your Business
    Protect Your Business
    Celebrate Courage
    Search

    Small Business Insights

    Sign up to get the latest small business news delivered right to your inbox.
    Start Your Business
    June 18, 2021
    small business owner research small business loans

    How to get a startup business loan

    Start up | Entrepreneur
    By:
    Kathleen Moore

    Share Image

    Embed Image

    Copy

    Share Article:

    If you are one of the 1.3 million people who filed applications for new businesses in the first quarter of 2021, congratulations. Entrepreneurs like you are proving that the post-pandemic economy holds plenty of promise. Now, before you launch, get a small business start-up loan. Yes, a loan. 

    Business equity is great. And profits, the goal. But even the hottest start-ups can struggle with unexpected blips like inventory shortages, equipment repairs, and unforeseen market fluctuations. Why tie up your early revenue stream with these issues? A well-structured loan can help you weather these short-term storms without neglecting your business’s long-term growth. Here’s what you need to know. 

    Put your dreams on paper

    Before connecting with a potential lender, outline your best case in writing. Requirements vary by loan source, but here are some items you’re bound to need:

    • A business plan. How do you plan to build your business? If you’ve never written one before, don’t let that stump you. The SBA has a free business plan guide. 
    • A financial plan. Demonstrate your business savvy by telling potential lending partners how capital will be routinely managed. You should also state the specific amount you want to borrow and outline your plans for repayment.  
    • A credit report. This will be used to determine your credit risk. Don’t count yourself out if your rating isn’t stellar. Many of the lenders who cater to start-ups have flexible criteria. 
    • A collateral statement. Many lenders will ask you to use a home, car, business inventory, or other property as collateral for your loan.

    Related: How to qualify as a small business

    Find the right loan

    The Small Business Administration (SBA) is a great place to start. The SBA works with intermediary lenders to offer borrowers insured business loans from $50,000 to $5.5M. Businesses can access SBA’s Lender Match, which uses an online form to collect information about your business. Fill out that form, and Lender Match will send you a list of approved lenders from your community. All of them are authorized to negotiate a SBA-backed loan with you.  
    Keep in mind, your loan application must be approved by the lender. Interview potential lenders to see who is best suited to your needs, and submit your application directly to the lender.

    All SBA-backed loans offer some combination of business-friendly terms, including reasonable interest rates, flexible overhead conditions, low collateral requirements, or continued counseling and education to support your business’s success.

    Here are three of the most popular options:

    • The 7a Loan program offers up to $5M in short-and long-term working capital that can be used for a number of purposes, including furniture, fixtures, supplies and real estate. 
    • The 504 Loan program provides up to $5M in long-term, fixed rate financing for major fixed assets that promote business growth and job creation.
    • The Microloans program provides loans of up to $50,000 to help businesses start up and expand. Shop around 

    In addition to the SBA, there are numerous private lenders who will compete for your business. When reviewing their products, keep in mind your unique needs as a new business owner. What are their short- and long-term rates, their fee structures, and their policies on prepayment penalties, grace periods, and the lender’s ability to demand full repayment?

    Fundera lets you compare offers from multiple lenders when you fill out a single application. They also provide a specialist to help you decide which offer is best for your business. 
    Check out grants

    You may think that the competition for free money will be too fierce. Think again. Many grants are designed to assist specific groups. Others focus on stimulating different sectors of the economy. If you or your business qualify, why would you let a grant application stand in the way of getting fresh capital? Don’t know where to begin? Try Grants.gov. It has a huge database of grants administered by government agencies.

    And the SBA is continuing to help COVID-impacted businesses rebound with resources like the Sheltered Venue Operators Grant, a part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

    Related: 15 Small business grants all women entrepreneurs should apply for

    Consider crowdfunding

    Crowdfunding sites like GoFundMe, Kickstarter, Indiegogo and RocketHub can offer unprecedented returns for struggling start-ups. After all, you’re asking literally everyone in the world to donate a little bit to your business. Launch a campaign that goes viral, and you’re all set. Before you jump in, check out this overview of crowdfunding opportunities. 

    Friends and family 

    The unwritten rule about accepting financial help from your loved ones is simply this: put it in writing. Sure, they loved your idea, and they love you. But they also have some affection for that cash they lent you.  
    Or was that a gift? Maybe it was both. Before you accept a loan, a gift, or a bid for equity from your beloved Uncle Fred, write up a formal agreement that defines all your terms. The folks at Onedeck have put together a seven-point checklist that will help you touch on the important points.

    And make sure you’ve got business insurance that will back you up, whatever your size. You can get a fast, free quote in minutes, and be covered the same day. 


    Protect Your Business

    Protect the business you’ve worked so hard to build. Get a fast, free quote and your business could be covered today.

    Get a Quote
    Get a Quote
    Subscribe to our newsletter

    Related Articles

    5 Min Read
    Female entrepreneur in office proud to be her own boss

    How to never get laid off again: Be your own boss!

    Entrepreneur

    Layoffs are bound to happen during our careers, however, there is a way to ensure that you never get laid off again – start your own business.

    Read More

    5 Min Read
    Female entrepreneur dreaming of elevating her small business to the Fortune 500 list

    Dream big! Devoted entrepreneurs now helm Fortune 500 companies

    Start up | Entrepreneur

    Not every startup company makes it to the Fortune 500 in the founder’s lifetime, but some do. Take some inspiration from these companies which are still being led by their founders, Dell, Tesla, and more.  

    Read More

    6 Min Read
    Female yoga instructor talking with two eager female students

    How to start a yoga business: Here's what you need to know

    Start up | Entrepreneur

    Have you been wondering how to become a yoga instructor? Discover all you need to know about what certifications you need, techniques to marketing your yoga studio, and more.

    Read More


    We’re here to help.
    We provide tailored insurance for the specific risks you face, so you can take the right risks to grow your business.
    Get a Quote
    Get a Quote

    Footer menu 1

    • What We Cover
      • Business Insurance
      • General Liability Insurance
      • Professional Liability Insurance
      • Errors and Omissions
      • Cyber Security Insurance
      • Workers Compensation
      • Other Coverage
    • Who We Cover
      • Small Business Owners
      • LLC
      • Sole Proprietors
      • Entrepreneurs
      • Side Hustle
      • Contractors
      • Home Businesses
    • For Our Customers
      • Refer a Friend Program
      • Covid-19 Response
      • Claims Center
    • For Business Owners
      • Save with our Partners
    • About Hiscox
      • About Us
      • Careers
      • Contact Us
      • Hiscox Corporate
      • Investors
      • Foundation
      • Newsroom
      • We Stand Together
      • Affiliate Partner Program

    Footer menu 2

    • Accessibility
    • Site Map
    • Privacy Policy
    • Terms of Use
    • Legal Notices
    • Español

    Do Not Sell or Share My Personal Information

    Feefo Reviews: Hiscox rated 4.7/5 with 1,067 reviews between January 1, 2022 - January 1, 2023

    © 2023 Hiscox Inc. All rights reserved. Underwritten by Hiscox Insurance Company Inc., 30 N. LaSalle St., Suite 1760, Chicago, IL 60602. As of December 31, 2022, HICI had admitted assets of $1,458,861,470 and policyholders surplus of $380,056,863. Total liabilities were $1,078,804,607 (inclusive of $529,538,410 of loss reserves) and paid-up capital stock was $4,242,000.

    icon-facebook
    icon-youtube
    icon-twitter
    icon-linkedin