Getting a startup loan is quite difficult. You may be aware of the venture capitalists and angel investors pumping in millions of dollars into tech startups but that is not very common. For every major investment that you hear of, there are more than a hundred and possibly hundreds of startups longing for a similar investment. Getting a startup loan is complicated for obvious reasons. There is very little evidence or financial history to show that the business is viable. A major part of the business plan is in the realm of speculation and hope or at best educated guesswork. Also, startups don’t always have very experienced professionals or business owners helming the enterprises. When seasoned entrepreneurs launch a startup, they don’t really struggle to get a startup loan. Their personal and professional history works in their favor.
Can you get an SBA Loan as a startup?
Let us get to the point. SBA loan is one of the most talked about when it comes to funding small businesses. No matter how promising a startup is, it is a small business when it is launched. Now, there is no provision or statute that says SBA loan cannot be a startup loan. The Small Business Administration doesn’t discard startups from qualifying or reject the applications as a default principle. But there are restrictions to who is considered eligible.
SBA loan is channeled through banks and financial institutions. They are always a little anxious with startups. In most cases, for any startup to qualify for an SBA loan there has to be at least two to three years of bank statement or financial history. In effect, the company must have been around for three years and there should be something to show. It cannot be all plans and expectations or promise. Banks or lenders will want to see money being invested and money being made. If a startup has no major tangible assets or is just a plan and there is no financial transaction to show that the business has potential, then SBA loan is out of the question.
Microloan to the Rescue!
There is one type of SBA loan that can be called a startup loan. It is classified as microloans. A microloan is not offered by banks or traditional lenders. They are routed through local credit unions or nonprofit organizations. These loans are usually small and are meant for people who don’t have much cash on them. There may be a need to offer some personal guarantee or collateral but one can get a startup loan even without two to three years of bank statements.